Kenya’s Anti-Corruption Commission Puts Telkom-Airtel Merger Deal On Hold

Kenya’s Ethics and Anti-Corruption Commission (EACC) on Wednesday put on hold a planned merger of Airtel Kenya with Telkom Kenya amid an ongoing probe into allegations of misappropriation of public funds at Telkom, reported Reuters.

In February, India-based telecommunications services provider Bharti Airtel had said its unit Airtel Networks Kenya and Telkom Kenya had inked an agreement to merge operations. The company had previously said the yet-to-be closed merger deal would not take into account Telkom Kenya’s extensive real estate holdings or certain government service contracts.

Telkom Kenya is 60 percent owned by UK private equity firm Helios Investment Partners and the remaining 40 percent by the Kenyan government.

Kenya’s anti-graft commission has reportedly suspended the merger as it is “conducting investigations into allegations of misappropriation of public funds in the process of privatization, recapitalization and restructuring of balance sheets of Telkom Kenya Ltd”, EACC spokesman Yassin Amaro said.

Amaro, however, did not offer any detail on how long the investigation would take. He said the anti-corruption commission was examining Telkom’s merger conditions Airtel Kenya and how Telkom is safeguarding the interest of taxpayers.  He added that the investigation was only restricted to Telkom.

A Reuters news report quoted Telkom Kenya Chief Executive Mugo Kibati saying the company would cooperate with the investigation and said the probe was not linked to the merger deal.

The investigation follows a recommendation by the Public Investment Committee (PIC) that officials in the Treasury and ICT ministries involved in Telkom’s privatization be probed. EACC initiated an inquiry into the matter after it received the PIC report on May 20, 2015.

The merger is important for both Airtel and Telkom to jointly take on competitor Safaricom, which currently owns a 62.4 percent market share in the Kenyan telecom market. Airtel Networks Kenya control around 26.1 percent, while Telkom accounts for 8 percent of mobile telecom subscribers.

Caroline Finnegan

A professionnal journalist for the past ten years, I cover global news and economic affairs for The Chief Observer.

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