The Competition Tribunal has now ruled that Airtel and Telkom Kenya can now sell up to 40pc of their merged business over the next five years. The merger was facing regulatory orders from the Competition Authority of Kenya (CAK) that had blocked any sale agreements.
CAK had blocked any share sale deal to ensure that the telcos did business as a combined entity and did not use the merger as a stepping stone to other speculative financial deals. The strict rules were part of its conditions for giving the go ahead for the Airtel and Telkom Kenya merger prompting the two telcos to appeal against the tough conditions attached to their merger.
The tribunal on Tuesday, however, said the merged entity cannot be bought off, but it will now be able to offer new shares to third parties in efforts to raise fresh capital. The tribunal also barred Airtel and Telkom Kenya from selling sections of its business to a firm that would cause a monopoly in Kenya’s voice or internet market.
Among the assets that Airtel/Telkom had been barred from selling are four frequency spectrum licences and five operating licences, that include a submarine cable landing licence.
Airtel and Telkom Kenya had asked to be given the green light to cut employee numbers after one year of merger as opposed to CAK’s set period of two years. If granted, employees of the two entities would have to be let go, the tribunal, however, retained the job protection clause.
The combined entity would create stronger competition for Safaricom, which now controls about two thirds of the market in terms of subscribers.
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