Bharti Airtel said its unit Airtel Networks Kenya and Telkom Kenya have signed a pact to merge operations, which will help the Sunil Mittal-led telco emerge stronger in the east African market. It will also improve overall valuation in the runup to its initial public offer (IPO) in Africa, likely in May-June.
After completion of the deal, the two companies will merge mobile, enterprise and carrier services businesses in Kenya (subject to approval) to operate as Airtel-Telkom, which will “invest in networks to further accelerate rollout of future technologies,” said an Airtel statement on Friday. No financial details were provided. Telkom Kenya is 60% owned by UK private equity firm Helios Investment Partners and the rest by the Kenyan government.
It’s the third-largest telco in that country, with over 5 million users, behind market leader Safaricom with over 30 million and Airtel Kenya, with over 10 million customers. The combined entity will have over 31% customer market share, compared with Safaricom’s 60%-plus. As of September, Airtel Kenya voice and mobile data traffic shares were 33.3% and 21.9%, respectively.
“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 SMEs (small and medium enterprises) which would have access to a diverse portfolio of world-class solutions,” Airtel said.
Airtel shares closed 0.9% higher at Rs 313.60 on the BSE on Friday. Sector experts said the merger would be value-accretive, given scale driven synergies, which are ever so important in the Africa market context.
The Airtel-Telkom Kenya deal follows Airtel Africa recently raising $1.25 billion by concluding a placement of shares to six global investors, followed by another placement worth $200 million to Qatar Investment Authority. The IPO is expected to garner an additional $1.5-1.6 billion.
SOURCE: The Economic Times