Safaricom wants Telkom & Airtel Kenya to pay Ksh 1.3 b debt before merger


Safaricom is not opposed to the proposed Telkom and Airtel Kenya merger, according to a statement by its chief executive refuting claims made earlier by Telkom Kenya chief executive.

In a statement, Michael Joseph, CEO – Safaricom PLC, said “Our attention has been drawn to claims by Telkom Kenya that Safaricom is opposed to its proposed merger with Airtel Kenya. We wish to clarify that this is not Safaricom’s position. “

The chief executive added that Safaricom believes in competition based on innovation, investment, focus on brand building and service to the customer. Joseph added that industry players are free to engage and organize themselves as they please, subject to regulatory approvals, to achieve their objectives. 

Joseph was addressing claims made by Mugo Kibati, CEO, Telkom Kenya in a recent media briefing.

“We have no quarrel at all with our colleagues at Safaricom, we are simply trying to restructure and improve our own business and for the good of the industry. It is unfortunate, however, that Safaricom now wants to delay this process that seeks provide customers with more credible options. 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?” Kibati said.

Joseph denies these allegations and indeed Safaricom worked with the industry regulator Communication Authority of Kenya and Airtel Kenya in 2014 during a similar transaction when Essar Telecom sought to exit the market.

Safaricom’s concerns are the millions owed by the two firms for services it delivered.

Safaricom says the two operators owe it KES 1,297,448,468.88, incurred for the provision of various services including interconnection, co-location and fibre services. This debt is 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 effected,” said Joseph.

The second issue, according to Safaricom, is the need to rebalance the frequencies allocation. 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. Given the size of Safaricom’s customer base in comparison to the current spectrum holdings, it is apparent that the transaction will create a disproportionate imbalance in the spectrum allocation, which will be inconsistent with the market share. 

Safaricom says it also wants equal treatment of operators and creation of a level playing field within the industry, specifically in relation to licensing and operations requirements.