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Bharti Airtel unit to merge with Telkom Kenya

Reuters  |  NAIROBI 

By Duncan Miriri

(Reuters) - India's Airtel said on Friday its unit Airtel Networks Ltd has agreed to merge with Telkom Ltd, the East African nation's

Three industry sources told last month that Airtel was in talks to buy Telkom to create a stronger challenger to

Kenya has one of the most advanced telecoms sectors on the continent, but Safaricom's 65 percent market share has curbed competition and prompted the regulator to mull intervention.

Telkom, which is 60 percent owned by London-based Helios Investment, accounted for 9 percent of Kenyan mobile telecom subscribers last September, behind second-placed Airtel, which had a 22.3 percent market share.

The owns the rest of Telkom's shares.

The companies will combine their respective mobile, enterprise and in Kenya to operate as Airtel-Telkom, both firms said.

The deal will not involve Telkom Kenya's extensive and some government contracts for unspecified services, the company said.

No timeframe has been given for the deal, and both companies will operate as normal until the transaction is completed.

Before mobile telephones took off, Telkom enjoyed a monopoly for decades as the provider, giving it access to that it still owns.

It was privatised in 2007 when French Orange bought a majority stake, which was subsequently sold to Helios in 2015.

Telkom's will become the of the new company. Telkom said it has the option of taking up to 49 percent in the new entity if it hits undisclosed targets before the deal is sealed.

But Telkom is unlikely to hit those targets and will probably end up with their minimum stake of 30 percent, an industry privy to the deal said.

"The final shareholding will be determined at the closing of the transaction," Telkom said in a statement.

Prasanta Sarma, the of Airtel Kenya, will hold the same role in the combined entity, Telkom said.

"The person who is in the driving seat is Airtel because of their numbers. You always want to be in the executive after a transaction like this," said the industry source.

told last month the merger of Airtel and Telkom would be welcome as it would boost competition in the sector, forcing the regulator to ditch its proposed measures against the

(Additional reporting by in Bengaluru; Editing by and Jan Harvey)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Fri, February 08 2019. 18:36 IST