The proposed combined entity will have enhanced scale and efficiency.
Telkom merger good deal in disruption era

DISRUPTION WAVE

Telkom merger good deal in disruption era

As Kenya rallies behind the government’s commitment towards realising Vision 2030 and the Big Four agenda, digitisation of key aspects will be crucial on this journey.

A Telkom shop in the central business district in Nairobi
A Telkom shop in the central business district in Nairobi
Image: FILE

The global technological innovation wave portends major challenges and opportunities in the telecommunications landscape.

Telcos now have the opportunity to champion a more robust agenda in shaping the discourse around artificial intelligence, Internet of Things, robotics and virtual reality.

We are witnessing a disruptive convergence of technologies with digitisation as their backbone. Even as this happens, Telcos have to reorganise themselves and realign their broader business strategies to rejuvenate and seize opportunities that come with this disruption to remain relevant.

 
 

As Kenya rallies behind the government’s commitment towards realising Vision 2030 and the Big Four agenda, digitisation of key aspects will be crucial on this journey.

Manufacturing, for example, should be heavily reliant on artificial intelligence and robotics to increase efficiency. It, therefore, behooves Telcos to invest and provide digital solutions that will bolster the manufacturing processes.

In February, Telkom and Airtel announced their intention to combine Telkom’s Mobile, Enterprise and Carrier Services businesses with Airtel, to operate under Airtel-Telkom.

The proposed combined entity will have enhanced scale and efficiency, larger distribution network and strategic brand presence.

This will enhance the range and quality of products and service offerings in the market, and greater choice and convenience to the consumer.

Airtel-Telkom will also ensure sustained investments in networks to accelerate the roll-out of future technologies.

The Enterprise and Carrier Services businesses will get a boost with a larger fibre footprint and increased number of enterprise customers —including large corporations and SMEs that would have access to a diverse portfolio of world-class solutions.

At a global level, the deal in question is not unusual as there have been various mergers, acquisitions and rebrands, providing companies with opportunities to reinvent themselves, in an effort to stay afloat and where possible thrive.

The forces propelling the coming together of Telkom and Airtel also present interesting, perhaps fundamental challenges for regulatory frameworks.

This range from our own domestic telecommunications market structure to the technological disruptions that Kenya, as is the case with other economies the world over, will have to keep up with.

A healthy regulatory environment is crucial for the growth of Kenya’s telecommunications industry, which is one of the only markets in the world with extreme incumbent industry concentration.

This is the moment to move from the talk and act decisively on the dangers of a potential monopoly; a situation that could occur, if the intended merger is not supported, forcing the country to witness the death of the two smaller players. 

In Europe, the regulatory environment continues to propel the growth of smaller players in that telecommunications space, leading to a healthy telecoms market. Belgium and Germany, for instance, lead this transformative journey, creating an operating space for smaller Telcos to thrive in their markets.

 
 

So, back home, inasmuch as constructive criticism and worthwhile skepticism is encouraged, we should de-politicise the process, and ask upon the regulatory actors that hold the key to the realisation of the merger, to appreciate the full potential that this merged entity has to provide more robust and alternative choice to the consumer, and, with regulatory relief, see to a thriving Telco market.

Despite operating in a tough environment, Telkom has succeeded in providing services to its consumers, adapting to technological advances and most importantly, seizing the opportunities that come with disruption in the digital space.

The transfer of Telkom’s main telco business to the combined entity will allow it to offer better services and solutions to its customers. It will also be seeking to reshape its value proposition with renewed vigor, as it evolves into a fully-fledged technology outfit.

Technology controls and powers virtually all sectors of the economy: Finance Health, Agriculture, Manufacturing, Education and Trade. Therefore, Telkom’s relevance and contribution to the country’s GDP, directly and indirectly, cannot be overlooked, in its renewed focus as a strong technology partner, that will support the government’s digitisation agenda, through targeted solutions and management support, to rapidly advancing customer demands and a dynamic economy.

Just picture it. Kenya’s Technology sector’s milestones qualify as case studies the world over, in the future. It attracts further investment, both local and foreign. Telcos and technology companies get to focus on their core business; investing in research and development – launching new products and solutions to improve the overall customer experience. This, however, will remain a utopic target, if we do not expedite the much-needed industry reform.

The writer is the CEO of Telkom Kenya

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