Safaricom refutes claims it is against Airtel-Telkom merger

Safaricom PLC has refuted claims by Telkom that it is against the proposed Airtel-Telkom merger.

In a statement by Safaricom CEO, Michael Joseph, the telco says it believes in competition based on innovation, investment, focus on brand building and service to the customer. “Industry players are free to engage and organize themselves as they please, subject to regulatory approvals, to achieve their objectives,” read the statement.

During a media briefing on the status of the merger, Telkom Kenya CEO, Mugo Kibati had said, “We are simply trying to restructure and improve our own business and for the good of the industry. It is unfortunate, however, that Safaricom now wants to delay this process that seeks to provide customers with more credible options. Does the dominant player not want to see this sector grow? Is the Dominant player wary of competition, and even more precisely, wary of competitive pricing, choice and value for money for the consumer?”

Safaricom said that it worked with the industry regulator Communication Authority of Kenya (CAK) and Airtel Kenya in 2014 during a similar transaction when Essar Telecom sought to exit the market.

“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,” it added.

Safaricom says it is objecting to the merger until a debt owed by the two operators, amounting to KES 1,297,448,468.88, incurred for the provision of various services including interconnection, co-location and fibre services.

On the debt, Safaricom says, “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.”

The firm further observed that in an instance where the merger is approved, there will be an imbalance in frequencies as the merged entity will have a wider frequency with almost half the customers as Safaricom. Post-merger, Airtel- Telkom will jointly hold 77.5 MHz of 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 C1 – Public disproportionate imbalance in the spectrum allocation, which will be inconsistent with the market share;” read part of the statement.

The market leader said there should be equal treatment of operators and creation of a level playing field within the industry, specifically in relation to licensing and operations requirements.

It added, “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.” concluded the statement.

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