Airtel - Telkom Kenya Merger; Should Safaricom Be Uneasy?
Airtel Kenya and Telkom Kenya have announced a merger of operations under the brand name Airtel-Telkom. The merger awaits regulatory approval which we see no reason for denial given Safaricom’s apparent dominance. We also note that, the Cabinet Secretaries of Treasury and ICT have made accommodative comments lauding the merger.
In our view;
- Sustainable competition will be based on ecosystems in addition to product.
- The merged entity could increase the prices of its voice and SMS services to support profitability bearing in mind that voice and SMS are no longer an effective competitive gizmo over Safaricom.
- We expect Airtel-Telkom to be a stronger effective competitor to Safaricom especially in the data segment.
- We do not expect a ‘collusive’ duopoly given the historical rivalry against Safaricom and possibility of intervention by regulatory agencies. In the duopoly market, some level of competition will continue to exist.
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