Global telecommmunications company, Bharti Airtel is reportedly in talks to buy Kenya’s third-largest telco, Telkom Kenya. This is in a bid to create a stronger challenger to the nation’s leading telco, Safaricom.
Reports have it that London-based Helios Investment, which owns a 60% stake in Telkom, is looking to partly cash out of the investment. And Bharti Airtel is in preliminary talks with Helios, with a deal to be sealed sometime in March. This renewed move comes after the two companies held merger talks last year, but later abandoned the plan.
Airtel Kenya, with 10 million-plus customers, is the nation’s second largest telco (22.3% market share) behind market leader Safaricom with over 30 million (64.2% market share) and followed by Telkom Kenya with over 5 million users (9% market share).
A successful deal could hand them a combined share of about 33.3% which is a better challenge to Safaricom’s 64.2%.
What Would this Move Mean for Airtel Africa?
It is expected that the buyout will increase Airtel Africa’s overall valuation given the synergies that would get drawn by such a consolidation.
Although, industry stakeholders say this will largely depend on the premium Airtel pays to buy the controlling stake in Telkom Kenya.
Currently operating in 14 countries in Africa, Airtel is the second-largest telco on the continent with a customer base of about 94 million. It is looking at over 100 million customers should the Telkom Kenya deal pan out.
In most of the markets it operates, Airtel is ranked amongst the top 2 telcos.
Airtel Africa which arrived in 2010, has in recent times experienced a turnaround in profit making. This is a total opposite of its first 7 years on the continent – when it even contemplated exiting the African business altogether.
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