Telkom Kenya will, in the ongoing merger deal with Airtel, hold on to its real estate portfolio and specific government services including its fiber network business to offer better and a more secure communication system.
The merger, which was announced on Friday will see Telkom’s National Optic Fibre Backbone (Nofbi), which provides telecommunication connectivity across the 47 counties, be excluded from the deal.
Sources indicate that the government, which owns 40 percent of Telkom Kenya, initiated the move for fear of handing the system to an entity it had little control over. It couldn’t risk the merger have the upper hand on sensitive communications and go through the hassle of transmitting state documents.
The ICT Authority website states that the implementation of Nofbi aims to ease communication across counties as well as improve government service delivery to the citizens such as the application of national identity cards, passports, and registration of birth and death certificates.
The two telcos announced that they had entered an agreement to merge their mobile, enterprise and carrier services to form Airtel-Telkom – a single joint venture company.
A joint statement from Airtel and Telkom noted that the final shareholding will be determined at the closing of the transaction.
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“Telkom Kenya has the option of holding up to 49 percent of that shareholding,” said the two operators.
Telkom Kenya’s fiber optic is funded by taxpayers and the first phase was completed exactly a decade ago. The project provides network access points in county headquarters as well as some neighboring towns.
The optic fiber goes through 58 towns in 35 counties and a total of 4,300km of cable has already been laid.
Telkom Kenya’s multi-billion-shilling real estate will also be left out of the merger. As of now, there are no hints regarding the other specific government services that will be excluded from the planned consolidation.
Meanwhile, after successful talks, the two companies will seek regulatory approvals from the Competition Authority of Kenya (CAK), the Communications Authority (CA) and the Central Bank of Kenya (CBK).
Airtel-Telkom, according to the latest data will have a combined market share of 31.3 percent against Safaricom’s 64.2 percent.
Consecutively, the two will have a total 14.6 million mobile subscribers, which is 48.76 percent of the subscribers Safaricom registered at the end of September; 29.94 million.
It was announced, however, that Airtel Networks Kenya Limited (Airtel Kenya) and Telkom Kenya Limited (Telkom Kenya) will see no immediate changes to their operations and they will continue as usual.
The respective leadership and management, legal, organizational and staffing structures will also be left intact.