The sale of Telkom Kenya continues to lurch from one controversy to the next following revelations that the company that will now buy a 60 per cent stake in the telco did not have any online presence until last month.
The ownership of the Dubai-based company that will inherit the stake in Telkom Kenya from PE fund Helios Partners remained scanty with Treasury and other government officials remaining cagey.
Also, details of the bidding process that landed the Emirati company its first known investment on the continent were not provided by the National Treasury by the time of going to press.
There is also lingering uncertainty over the actual amount due to be refunded to the government by the PE fund, which held the Telkom stake via Mauritius-based subsidiary Jamhuri Holdings Ltd.
Infrastructure Corporation of Africa (ICA) was revealed via a National Treasury press release on Wednesday as the preferred bidder for the Telkom stake.
This followed the disclosure in a Tuesday Cabinet brief that the government had decided to rescind the August 2022 decision to purchase the stake from Helios for a total consideration of Sh6.1 billion.
A top lawyer familiar with the deal said that earlier discussions had resolved that the new investors would take over the liabilities of Telkom and leave Helios to keep the Sh6.1 billion since it was reimbursement for loans the private equity firm had given Telkom.
This prompts the question on what amount Helios is meant to refund the government following reversal of the earlier deal and fact that Helios sold the 60 per cent stake to the State for $1 (Sh148) based on documents tabled in Parliament.
From left: Then ICT Cabinet Secretary Joe Mucheru, his National Treasury counterpart Henry Rotich and Helios Investment principal partner Pierre Heinrich during the sale of Telkom Kenya shares held by Orange East Africa to Jamhuri Holdings Limited at Treasury buildings in Nairobi in mid-June 2016.
Photo credit: File | Nation Media Group
The UK-based fund also forwent $239 million (Sh35.48 billion) it inherited from Orange in 2016 when it bought a 70 per cent stake from the French telecoms operator.
Details on the bidding process also remained scanty, with the public only learning this week that the government had been in the hunt for new investors into Telkom for at least nine months.
In the Wednesday release, Treasury CS Prof Njuguna Ndung’u said that ICA had been selected following a competitive process that was set in motion in January this year once a decision to recall the Helios deal was made.
An evaluation process recommended ICA to be the new majority owner of Telkom, based on its offer to the government.
The Treasury, however, did not mention the number of firms that made bids, and whether the Helios deal had been concluded and the Sh6.1 billion paid to the fund prior to the reversal of the sale.
The initial deal, which was concluded in the sunset days of the Jubilee administration, came under scrutiny once the Kenya Kwanza administration took office after disclosures to Parliament by Controller of Budget Margaret Nyakang’o that she refused to authorise the withdrawal of the billions to pay for the stake.
Helios had sought to exit the investment after the refusal by the government to approve a proposed joint venture between Telkom and Airtel Kenya, which allegedly caused the former to suffer a loss of $200 million.
Helios was also frustrated by the government’s decision to expropriate Telkom’s 79-acre prime property on Nairobi’s Ngong Road, valued in excess of Sh10 billion, for the construction of a sports ground.
ICA also failed to respond to questions submitted via the contact channel it has provided on its website about the financial details of its planned investment, the treatment of Telkom’s liabilities that it is willing to take over, as well as the identity of other investments it may have made around the world.
A check yesterday of publicly available details on ICA on it corporate website indicate that it has its head office in Dubai, United Arab Emirates, and others in Stockholm, Sweden and Mumbai, India.
The company does not list any existing investments, other than the planned entry into Africa via investments in the telecommunications sectors in Kenya, Uganda and Malawi using the Telkom brand.
ICA says in its website that its initial focus is to establish itself in Sub-Saharan Africa through investments in under-capitalised mobile operators who also need infrastructure upgrades.
