Safaricom raises concern on debt

The Communications Authority of Kenya (CA) yesterday refuted claims that Safaricom has raised opposition to the planned merger between Telkom and Airtel Kenya.

Telkom Managing Director Mugo Kibati on Tuesday accused the leading mobile network operator of opposing the merger in a bid to protect its turf.

“The letter from Safaricom was a representation that does not object to the merger but shares Safaricom’s views on certain issues,” CA Assistant Director for Communications Rachel Alwala told The Standard in an emailed statement.

“The letter raises concerns relating to debts owed to Safaricom by the parties and proposes rebalancing of spectrum in the process of the merger, among other issues. The authority is reviewing the request alongside other representations and will respond appropriately.”

Safaricom for its part said it was concerned over the settlement of the Sh1.2 billion debt 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,” said Chief Executive Michael Joseph in a statement. “Our expectation is that the payment obligations should be settled in full before the transfer of business is effected.”

He also indicated that the frequency allocation should be rebalanced after the merger between Telkom and Airtel Kenya. “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,” said Mr Joseph.

According to Safaricom, the merger will create a disproportionate imbalance in the spectrum in favour of the merged entity, despite the larger customer base of the latter. On Tuesday, Telkom boss Mr Kibati said the merger concerns certain aspects of the telco’s business and not the entire outfit.