Inside Telkom, Airtel struggle to remain afloat against Safaricom’s continued dominance
Airtel Kenya and Telkom-Kenya, which recently attempted a merger to strengthen their financial position, are set to get further loans from international financiers to bolster their financial muscles.
Airtel has already inked a deal with the International Finance Corporation (IFC) for a Ksh.17.15 billion investment, an impetus for the telco to refinance its loans. According to IFC, the investment targets Airtel’s seven markets in Africa including Kenya.
On the other hand, Members of Parliament have already allocated a Ksh.2.2 billion fund to help Telkom Kenya in which the government owns a 40 percent stake, stabilise its foot in the market.
The funding for two telcos will come with a huge expectation from financiers even as the government moves in swiftly to tame Safaricom’s dominance in the market space.
National Treasury Cabinet Treasury Ukur Yatani is keen on making mobile money transactions affordable for Kenyans, who have been reeling from harsh economic times exacerbated by the coronavirus pandemic since its advent on March 13, 2020.
According to Yatani, the move is facilitated by the fact that many Kenyans have been using Safaricom-owned M-Pesa for business and their daily lives hence it should be cheaper.
This even as consumers of the product have been lamenting high transaction costs.
The M-Pesa platform has over 30 million active users in Kenya alone compared to their opponents.
Airtel and Telkom Kenya have continuously argued that Safaricom enjoys a dominant position as it accounts for 90 percent of revenues, allegations that Safaricom has denied.
Airtel Kenya’s 2020 losses doubled to Ksh.5.9 billion from Ksh.2.78 billion in 2019 and is surviving on a series of shareholder loans from its parent company.
The move by Treasury is a win for two small telcos. They will position their products competitively against Safaricom’s which has enjoyed dominance since M-Pesa’s inception in 2007.