Telkom Kenya is reportedly planning to merge some of its operations with Airtel Kenya, as a first step before embarking on full takeover of the India-based operator’s assets in the country.

A source from industry regulator the Communications Authority of Kenya (CA) told Reuters that Telkom Kenya plans to take over all of Airtel Kenya eventually, but the structure is yet to be decided or a formal application submitted.

The companies could reportedly first combine their operations and function as one entity, as a way to stave off mounting losses in the short term.

Sources speaking to local publication Sunday Standard added the CA had been informed of the talks and will be formally briefed. Exact details of the merger remain undisclosed at this stage, but the most likely scenario will see Telkom Kenya eventually launch a full takeover of Airtel Kenya, which is incurring the biggest losses of the two.

“Under the venture, they will combine their assets, cut down on variable costs such as staff, distribution channels and marketing channels, among others,” the source said.

Safaricom battle
Combined, the joint entity would be able to compete better with market leader Safaricom. Telkom Kenya operates around 1,581 base stations and Airtel 1,548, bringing a possible combination closer to Safaricom’s 4,000.

Latest data from regulators shows Safaricom also holds a mobile market share of around 71.9 per cent, with 29.4 million subscribers.

Airtel is second with 14.9 per cent, while Telkom Kenya has 8.4 per cent. Combined, the two companies would have around 9.5 million mobile subscribers.

Rumours of an Airtel exit from Kenya follows speculation the India-based operator is considering an IPO of its business in the region.

In December 2017, the company was forced to deny reports it was mulling an exit in Kenya, along with Rwanda and Tanzania, with all three markets deemed unprofitable.