Safaricom seeks Sh1.2bn debt before Airtel, Telkom merger

Safaricom acting CEO Michael Joseph wants Telkom Kenya and Airtel to pay a Sh1.2 billion debt before the two companies are allowed to merge.

Mr Joseph said that since Airtel explicitly said it will not take up Telkom’s liabilities it will be difficult to chase those debts after the merger.

In a letter to the Communications Authority of Kenya (CA), Safaricom said Telkom owes Safaricom Sh906.6 million while Airtel has a Sh390.7 million debt for interconnection, co-location and fibre services.

“We request the Authority’s intervention in ensuring that all the outstanding debts owed to us in relation to the said services are paid in full as a prerequisite for the approval of this transaction,” Mr Joseph said.

Safaricom also raised issues with spectrum stating that Telkom and Airtel’s combined entity will hold a bandwidth of 77.5 percent for its 17. 3 million subscribers while Safaricom will have 57.5 percent spectrum for its 31.8 million subscribers.

Safaricom said that in 2016 it agreed to a CA deal which denied it additional capacity in spectrum to allow for competition and that the imbalance should be addressed before the merger. It added that for a long time it has also carried additional costs due to its leading position in rolling out network and paying for licences which should now end since Telkom and Airtel are now a major player.

Telkom Kenya managing director Mugo Kibati said it was unfortunate that Safaricom wants to delay the merger that seeks provide customers with more options.

“Is the dominant player wary of competition, and even more precisely, wary of competitive pricing?” Mr Kibati queried.