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Bharti Airtel’s Kenya unit to merge with Telkom Kenya

Airtel Networks Kenya, Telkom Kenya to merge mobile, enterprise and carrier services in Kenya.

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Bharti Airtel Ltd’s subsidiary Airtel Networks Kenya Ltd will merge with Telkom Kenya Ltd to create a new entity, Airtel-Telkom, which will invest in networks to accelerate the rollout of future technologies in the east African nation, the telecom firm said on Friday.

The transaction will see both companies merging their respective mobile, enterprise, and carrier services businesses in Kenya. The deal’s closure is subject to approval by the authorities. Airtel did not disclose other details of the Telkom Kenya deal.

“The enterprise and carrier services businesses should benefit from a larger fibre footprint and an increased number of enterprise customers, including both large corporations and small and medium enterprises, which would have access to a diverse portfolio of world-class solutions,” Airtel said.

Airtel Africa, the holding company for Bharti Airtel’s operations in 14 countries in the continent, aims to complete the process for an initial public offering (IPO) by July. In Africa, Bharti Airtel has categorised its business across three regions: Nigeria, East Africa (Kenya, Uganda, Rwanda, Tanzania, Malawi, and Zambia) and Rest of Africa (Niger, Gabon, Chad, Congo Brazzaville, the Democratic Republic of the Congo, Madagascar, and Seychelles).

In September 2014, Airtel had signed an agreement to acquire more than 2.7 million subscribers of YuMobile in Kenya.

Airtel Kenya is the number two operator in the country. The merger with Telkom will strengthen its presence. The combined entity is expected to have more than 31% market share in Kenya, a person aware of the development said requesting anonymity.

Telkom Kenya is 60% owned by Helios Investment Partners, with the government of Kenya holding the rest.

Bharti Airtel established its presence in Africa in 2010 when it bought Kuwait-based Zain’s Africa operations for $10.7 billion. Over the past few years, it has been trying to expand in Africa through local deals and has made three small acquisitions in Uganda and Congo Brazzaville, besides Kenya.

In October 2017, Airtel also signed a deal with Millicom, which operates the Tigo brand, to combine their operations in Ghana. In December that year, Airtel’s Rwanda unit announced the acquisition of Tigo Rwanda Ltd, making Airtel the second largest telecom operator in the east African nation.

In February 2018, it said it would consider launching an Airtel Africa IPO. In October, the company said six investors, including Warburg Pincus, Temasek, Singtel and SoftBank Group International, would invest $1.25 billion through a primary equity issuance in Airtel Africa. Last month, Qatar Investment Authority, the sovereign wealth fund of the state of Qatar, said would invest $200 million through a primary equity issuance in Airtel Africa.

The proceeds of these issues are being used to cut Airtel Africa’s debt and for growing its operations, which have seen a turnaround in recent quarters. Airtel Africa’s revenue at $853 million grew by 11.2% in the December quarter from $767 million in the year-ago quarter.

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