Telkom Kenya, Kenya’s third-biggest telecommunications company after Safaricom and Airtel, is now fully owned by the government after the treasury acquired a 60 per cent stake worth Sh6.09 billion from Helios Investment Partners, a UK-based private equity fund.
The deal, executed shortly before President William Ruto assumed office, means Telkom Kenya will eventually be listed at the Nairobi Stock Exchange (NSE) through an Initial Public Offering. (IPO).
Helios Investment had bought majority shares in Telkom Kenya from France’s Orange in 2015 at an undisclosed fee. The deal leaves the company with a value of Sh10 billion, equivalent to one per cent of the value of Safaricom.
Treasury argues that the State exercised its pre-emptive rights –privileges extended to shareholders that grant them preference to buy the stake in the business should one of the owners opt to exit – after Helios notified the government of its intention to exit Telkom.
“We bought the shares because the government was afraid Helios was going to sell to an investor that did not share the same vision with us in the turnaround of Telkom Kenya,” Treasury said.
Telkom Kenya’s mobile phone subscribers dropped from 4.23 million users in 2019 to 3.42 million in 2022, a 19.1 percent decline. According to the Constitution, the Treasury should table a mini-budget two months after withdrawing funds from the Consolidated Fund without the approval of members of parliament.
According to Parliamentary Budget Office (PBO), a unit of Parliament that advises lawmakers on financial and budgetary matters, the Treasury has abused this constitutional provision. “What happens now is that the Treasury withdraws money to fund what is not budgeted and comes to Parliament to rubberstamp the expenditure?” Martin Masinde, the acting director of PBO, stated.
Helios becomes the latest international operator to quit Kenyan telecommunication market. Within a span of 20 years, three telecommunication industries, India’s Essar Telecom, Kuwait-owned Zain and France’s Vivendi have quit the Kenyan market.
Safaricom, the dominant market leader, is part-owned by Vodacom and Vodafone, and has 67 per cent of the total 36 million mobile users in the country. Airtel, on the other hand, had 26 per cent of Kenya’s total mobile phone subscribers as of June 2022.
