Telkom-K gets Sh2.2bn State shareholder loan

Telkom Kenya will receive a Sh2.2 billion shareholder loan from the State after lawmakers allocated funds to support the telco’s development programmes.

“Increase Sh2.2 billion (development) for Telkom Kenya,” the budget committee of the National Assembly recommended in a report to the full House.

The government owns a 40 percent shareholding in Telkom Kenya, while the rest is held by a British private equity firm, Helios Investment Partners.

Although the parliamentary committee did not specify the projects and programmes to be funded through the shareholder loans, Telkom Kenya is in the middle of business reforms that require capital to successfully implement.

The telco mid last year announced an ambitious plan to create two wholly-owned subsidiaries to house its digital and financial services businesses as part of an effort to enhance service delivery.

“At this point and to enhance service delivery, Telkom is creating two 100 percent wholly-owned subsidiaries to house its digital and financial services businesses. The consumer service delivery unit will remain within Telkom,” the company said a statement when it announced the reforms last May.

The Sh2.2 billion investor loan would come as a major relief for Telkom Kenya, which had hoped to increase its financial muscle in a failed merger deal with rival Airtel Kenya.

On February 8, 2019, the pair had jointly announced the signing of an agreement that would have seen shareholders of both firms merge their respective mobile, enterprise, and carrier services businesses in Kenya.

The deal, however, collapsed after Parliament reportedly warned the National Treasury against approving it.

The merge plans were also thrown into limbo after the Ethics and Anti-Corruption Commission (EACC) wrote a letter questioning the sale Telkom Kenya’s properties during the privatisation period.

High Court Judge Jairus Ngaa last February, however, gave the two telcos the greenlight to revive their merger plans and quashed the letter by the EACC saying the purported move by the anti-graft agency to recover property already sold or stop those on sale was illegal.

The court heard that the Communications Authority (CA) and the Competition Authority of Kenya had informed Telkom Kenya that they would only approve the merger once the transaction was cleared by EACC.