The Government of Kenya Acquires Telkom

Telkom Kenya

The ownership of Telkom Company has returned to the state following an acquisition of 60% stake from the UK-based firm Helios Investment Partners. This purchase cost the Treasury approximately 6.09 billion.

In a deal that makes Telkom a fully state-owned firm, there are jitters and murmurs on the procedure used.

Critics suggest that the government has made a series of expenditures that were not approved by Parliament following William Ruto’s inauguration in September.

The acquisition is now threatening the plan to list the company at the Nairobi Stock Exchange (NSE).

When telephone systems shifted from landline to mobile communications in the early 2000s, Telkom was privatized to facilitate the new transition for the company. Following the privatization in 2007, the company was acquired by Orange, a French Company.

Orange later sold the company to Helios Investment in 2017 for an unknown fee.

Despite criticisms about the sale, the Treasury has defended its actions by stating that they were exercising their pre-emptive rights after Helios notified the government of its intent to sell.

Considering the turmoil that the company has gone over the years, it seems clear that Helios was no longer able to sustain the business in Kenya. Telkom has faced unprecedented competition from Airtel and Safaricom, which hold a combined market share of 90%. Telkom comes third at 6.2%.

The government now faces a humongous task to keep the company afloat. Perhaps it will be prudent to reprivatize the firm in coming years by selling majority stake to another private company. Another option is to revamp the company’s business model to either deepen competition in internet, voice, and SMS services, or diversify to a related business segment.

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