Airtel-Telkom Merger Suspended Over Corruption Allegations
The Communications Authority of Kenya has suspended the planned merger of Telkom Kenya and Airtel Kenya pending the completion of the investigation by Ethics and Anti Corruption Commission on how the merger deal was brokered.
CA director in charge of communications and public affairs, Christopher Wambua confirmed that the telecoms regulator had received a letter from EACC requesting the suspension of the deal.
“We have advised the parties that, in light of government shareholding in Telkom Kenya, approval shall only be granted once all the conditions set out. by the Authority are fulfilled and the transaction is cleared by the EACC,” he was quoted by Business Daily
The EACC is investigating whether public funds were lost when the Cabinet approved a restructuring exercise which saw France Telecom (now Orange SA) buy a 51 per cent stake in Telkom Kenya at Sh26 billion.
The recapitalization of the balance sheet saw the conversion of Treasury’s loans in Telkom Kenya into equity after Treasury ceded ownership of Telkom Kenya to Orange, the French multinational which later sold its stake to private equity fund Helios.
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“The commission is investigating an allegation of misappropriation of public funds in the process of recapitalization and restructuring the balance sheet of Telkom Kenya Limited in the year 2012 and the current merger of Telkom Kenya with Airtel Kenya,” Business Daily reported.
The merger was set for completion by end of 2019 and it is expected to have a combined share of 33.3 percent against Safaricom which has a larger market share 64.2%.
Featured Image Courtesy: Quartz.com
