Safaricom’s ultimatum before Airtel-Telkom merger

www.standardmedia.co.ke/business/article/2001340740/safaricom-s-ultimatum-before-airtel-telkom-merger

Safaricom has set an ultimatum for the Telkom-Kenya and Airtel merger while
downplaying claims that it is opposed to the deal, which is expected before
the end of the year.

On Tuesday, Telkom-Kenya Managing Director Mugo Kibati cried foul over
Safaricom’s opposition to the deal, which he says, will spur innovation in
the sector and put Kenya in the map as a tech giant in the region.

Safaricom says it does not oppose the move but wants the two operators to
settle a debt of Sh1.2 billion and the issue of frequency allocation to be
rebalanced.

“While we are supportive of industry changes that seek to deliver greater
choice and value to consumers, we have raised valid concerns that we hope
the regulator will consider and address as part of the approval process,”
says Safaricom CEO Michael Joseph.

“The first is the debt owed by the two operators, amounting to
Sh1,297,448,468.88, incurred for the provision of various services
including interconnection, co-location and fibre services. This debt is due
and payable, based on the agreement to provide services entered into with
the two entities as distinct operators. Our expectation is that the payment
obligations should be settled in full before the transfer of business is
effected.”

Safaricom also wants a rebalance to the frequencies allocation.

It says that the post-merger, Airtel-Telkom will jointly hold 77.5 MHz of
the spectrum against a customer base of 17.3 million, compared to
Safaricom’s 57.5 MHz with almost double the customer base at 31.8 million.

“Given the size of Safaricom’s customer base in comparison to the current
spectrum holdings, it is apparent that the transaction will create a
disproportionate imbalance in the spectrum allocation, which will be
inconsistent with the market share,” says Joseph.

The interim CEO also wants equal treatment of operators and creation of a
level playing field within the industry, specifically in relation to
licensing and operations requirements.

“Having articulated our concerns, we await direction from the regulator on
the way forward, especially in regard to the debt payment and rebalancing
of frequencies allocation.”

“We also look forward to working alongside other industry players to
continue delivering high quality, innovative services to Kenyans.”

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