Safaricom chief tackles merger concerns - Mobile World Live

Safaricom chief tackles merger concerns

04 SEP 2019

Interim Safaricom CEO Michael Joseph (pictured) denied reports the operator opposed a merger between rivals Airtel Kenya and Telkom Kenya, but urged regulators to closely scrutinise the financial and frequency implications of the deal.

In a statement, Joseph highlighted hefty debts as a key area for regulatory consideration. He said the rival operators owe Safaricom a combined KES1.3 billion ($12.5 million) under agreements struck with the individual companies relating to the provision of services including interconnection, colocation and fibre.

“Our expectation is that the payment obligations should be settled in full before the transfer of business is effected,” he explained.

The executive also expressed concern the merged business would hold an unreasonable amount of mobile frequencies and called for the regulator to ensure the scales are rebalanced before clearing the deal. Specifically, the combined company would “jointly hold 77.5MHz of spectrum against a customer base of 17.3 million, compared to Safaricom’s 57.5MHz” for close to 31.8 million users.

While Joseph noted the debt and frequency matters are the most pressing for Safaricom, he also highlighted the “equal treatment of operators and creation of a level playing field” as a factor which should be closely considered, “specifically in relation to licensing and operations requirements”.

This final point could be a swipe at Kenyan authorities, which have repeatedly threatened to force Safaricom to split its successful m-Pesa mobile payment service from its main communications division.

Criticism
Joseph commented a day after Telkom Kenya chief Mugo Kibati claimed Safaricom had petitioned authorities to block the merger. Kibati accused the operator of seeking to hinder growth in the mobile communications sector and of shying away from legitimate competition, The Standard reported.

Airtel Kenya and Telkom Kenya agreed to merge in February, after abandoning previous talks around the move in mid-2018.

In April, Telkom Kenya stated it would transfer various business units to Airtel Kenya, but explained the transaction would not cover debt.

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