Companies

Comesa agency approves Telkom and Airtel merger

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Telkom Kenya and Airtel have received the Common Market for Eastern and Southern Africa (Comesa) Competition Commission greenlight to merge at a time the deal has run into local headwinds. FILE PHOTO | NMG

Telkom Kenya and Airtel have received the Common Market for Eastern and Southern Africa (Comesa) Competition Commission greenlight to merge at a time the deal has run into local headwinds.

The regional trading bloc’s competition watchdog said that the merger of the two telcos would not skew competition in the regional market. It also noted the takeover would lead to a vibrant market.

“The committee responsible for initial determination (CID) determined that the merger was not likely to substantially lessen competition in the common market or any part of it,” said the agency’s commissioners in a letter dated August 16.

“Consequently the transaction is not likely to negatively affect trade between members. The CID therefore approved the transaction. The decision does not relieve the merging parties from their obligation to comply with other applicable laws,” it said.

The announcement comes as the two telcos eye approval from Kenyan regulators.

The Communications Authority of Kenya (CA) in August suspended the merger pending investigations by the anti-corruption watchdog into how the deal was brokered.

A separate investigation is also ongoing to establish the circumstances under which the Treasury ceded further ownership of Telkom Kenya to Orange, the French multinational which later sold its stake to private equity fund Helios.

Telkom Kenya, which is majority-owned (60 percent) by the UK-based Helios Investment Partners and 40 percent by the Kenya government, had earlier sought the communications regulator’s approval to merge their mobile, enterprise and carrier services to form a single joint venture company to be named Airtel-Telkom.

The CA, however, said in August it had informed the two telcos that it would not give the approval as it awaits the conclusion of the investigations by the Ethics and Anti-Corruption Agency (EACC).

“We have advised the parties that, in light of government shareholding in Telkom Kenya, approval shall only be granted once all the conditions set out are fulfilled and the transaction is cleared by the EACC,” said CA director in charge of communications and public affairs, Christopher Wambua.

Safaricom separately asked the CA not to approve the merger before Telkom and Airtel clear the Sh906.6 million and Sh390.7 million that they owe respectively for interconnection, co-location and fibre services.