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Telkom and Airtel Kenyaās merger plan came to a halt in August last year following a series of regulatory hurdles.
Last year, the company announced that it had agreed with Airtel Networks Kenya to stop merger talks after failing to comply with several regulatory burdens imposed by the Ethics and Anti-Corruption Commission (EACC) to clear the deal.
The EACC had ordered Telkom Kenya to stop disposing of its property and recover those already sold to complete the transaction as part of the many requirements.
In a court ruling, the High Court has termed the decision by the EACC illegal, clearing way for the dropped merger talks.
The EACC had ordered the Communications Authority of Kenya to suspend the deal as it continued to probe the Telkom Kenyaās transactions.
A high court judge said the EACCās decision was āunlawful because it is tainted by all or either of the grounds of illegality, irrationality and procedural impropriety.ā
āThis implies that it is only by a court order that any of the assets disposed of by the applicant may be recovered and it is only through the same means that the applicant may be restrained from further disposing of its property,ā the court ruled.
EACC lawyers said the said order to the CA that stalled the merger talks was just a request. However, the court order doesnāt prevent the EACC from looking into the transactions, which has been ongoing for years.
Telkom Kenya, 40 per cent owned by the government, had announced merger plans with Airtel Kenya in February 2019.
After regulatory hurdles, the telco reached a consensus with Airtel Kenya to stop the transaction. Telkom said, was due to āthe challenges experienced in getting all the approvals required to complete the transaction.ā
āAfter carefully reviewing the available options, Telkom has opted to adopt an alternative strategic direction and will no longer be pursuing the proposed joint venture transaction,ā the Mugo KIBATI, Telkom Kenyaās Chief Executive Officer. He said, adding that it was mutually agreed between the two parties.
The Airtel-Telkom merger also faced other issues, including a request by rival Safaricom to the CA to block the transactionĀ until the two cleared a combined debt of Ksh 1.3 billion. An Airtel-Telkom merger would have created a more potent competitor that can challenge long-term market leader Safaricom which controls over half of the market.
The deal was also to receive approval from the National Treasury, which was still pending, due to the governmentās 40 per cent stake in Telkom Kenya.
It remains to be seen if the companies would be interested in reviving the merger talks. As it stands, both parties seem to have moved on.Ā Telkom restructured its businessĀ after the fallout, andĀ Airtel almost instantly launched its free streaming appĀ days later.
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