Safaricom issues demands before Airtel-Telkom tie-up

 @faminga

All eyes are now on Communications Authority of Kenya (CA) for the final call on the merger between Airtel and Telkom Kenya after Safaricom raised concerns over the merger.

Speaking to Business Hub, CA chair Gituku Ngene said while the board has not officially received all the complaints, the regulator will set up a team to tackle the concerns.

“We will study and see implications and make decisions. There are other issues like employee payment disputes and another caveat from EACC, which must be tackled,” he said, adding that a team will be formed to review and advise the board. 

Yesterday, Safaricom acting chief executive officer Michael Joseph asked the merging entities to settle in full a Sh1.3 billion collective debt before the transfer of business is effected while calling for a rebalance of frequencies allocation before the union. Joseph was referring to a debt incurred for the provision of services including interconnection, co-location and fibre services which are due and payable.

“Based on the agreement to provide services entered into with the two entities as distinct operators. Our expectation is that the payment obligations should be settled in full before the transfer of business is affected,” he said.

He had hinted during Safaricom’s  Annual General Meeting that the company also wants the authority to rebalance the frequencies allocation, claiming the merger will create a disproportionate imbalance in the spectrum allocation, which will be inconsistent with the market share.

 “Post-merger Airtel-Telkom will jointly hold 77.5 MHz of spectrum against a customer base of 17.3 million, compared to Safaricom’s 57.5 MHz with almost double the customer base at 31.8 million,” he said.

Hinting at possible leniency on some players, Safaricom called for equal treatment of operators and asked for level playing field within the industry, specifically in relation to licensing and operations requirements.

“While we are supportive of industry changes that seek to deliver greater choice and value to consumers, we have raised valid concerns that we hope the regulator will consider and address as part of the approval process,” said Joseph. 

On Tuesday Telkom Kenya Chief executive officer Mugo Kibati raised concerns the merger was being sabotaged in what he termed efforts by Safaricom to deny Kenyans the chance to enjoy the benefits brought by an alternative player, therefore choice.

Dominant player

“Does the dominant player not want to see this sector grow? Is the dominant player wary of competition, and even more precisely, wary of competitive pricing, choice and value for money for the consumer?” he posed, and warned that further delay to approve the transaction could find Kenya staring at the potential reversion of the telco sector into a monopoly, impacting negatively on the welfare of the consumer and the economy.

In a statement to Business Hub yesterday, the Telkom said it stands by the position stated on Tuesday, “on the circumstances that have led us to combine some of our businesses into Airtel, which will enable the two players, through the combined entity, Airtel-Telkom, to have the scale necessary to take on the market and have a stab at having a competitive environment”.

The CA’s acting director-general Mercy Wanjau said Safaricom’s move to raise the matter of debts with the authority would not stop the merger.

She said CA is in the process of reviewing Safaricom’s representations alongside others and will provide updates in due course.