BUSINESS ECONOMY

Govt Spends Ksh6B to Fully Own Telkom Kenya

MARTIN SIELEOct 4, 20221 Mins read2k

A past Telkom Kenya event. The State is believed to have exercised its pre-emptive rights to purchase the stake after Helios indicated its exit. [Photo/ Telkom Kenya]

The National Treasury has acquired a 60 percent stake in Telkom Kenya from UK Private Equity fund Helios Investment Partners. Earlier in 2022, it emerged that Helios was planning to exit the telco, third in market share behind Safaricom and Airtel.

The 60% stake was acquired for Ksh6.09 billion and means the company is now fully state-owned. The deal values Telkom Kenya at Ksh10 billion.

The State is believed to have exercised its pre-emptive rights to purchase the stakes after Helios indicated its exit. It has been keen on the implementation of a turn-around plan for the loss-making telco, which has struggled to keep up in a market dominated by Safaricom. The transaction is among State expenditures made without Parliamentary approval in the run-up to the inauguration of President William Ruto on September 13.

Data from the Communications Authority shows that, as of September 2021, Telkom had only 6.4% of mobile SIM subscriptions, compared to Safaricom’s 64.6% and Airtel’s 26.4%.

A planned merger between Airtel and Telkom collapsed in 2020. Telkom CEO Mugo Kibati cited “challenges experienced in getting all the approvals required to complete the transaction.”

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The collapse of the deal, which would have put the merged entity in a much stronger position to challenge Safaricom, is believed to have influenced the Helios decision to exit the telco.

Helios bought the stake in Telkom from France’s Orange, who acquired it during the privatization of Telkom Kenya in 2007.

Telkom and Airtel have been lobbying in a bid to trim Safaricom’s market dominance. The splitting up of Safaricom’s financial services and telco units is on the horizon as a result of mounting regulatory pressure.

Interoperability, especially in financial services, is also expected to hand Safaricom’s rivals a boost. The new administration also has big plans for the sector, including a promise by Ruto to deliver broadband internet to homes across the country.