Safaricom is seeking a court injunction to block the sale of France Telecom’s 70 per cent stake in Telkom Kenya until it is paid a Sh639 million claim against the telecommunications company.
Safaricom, through its advocate Kiptinness and Odhiambo Associates, moved to court last Wednesday saying it will suffer irreparable loss and damages if the sale and takeover of France Telecoms’ stake in the Kenyan company is concluded before it is paid the amount.
France Telecoms on November 9 announced that it had signed a binding agreement with Helios Investment Partners to acquire the entire 70 per cent stake it held in Telkom Kenya.
The announcement triggered a similar demand for debt repayment from the industry regulator, the Communications Authority of Kenya (CA).
The CA wants to be paid Sh1.5 billion, which it has set as a pre-condition for approval of the transaction. Safaricom says several attempts to recover the debt from Telkom Kenya have failed. The court is set to give directions on the matter on Wednesday.
“Pending the hearing and determination of this application an interim temporary injunction do issue restraining the respondent (Telkom Kenya) whether by itself or by its employees, servants or agents or any other howsoever from finalising the sale of the shares of the respondent held by its parent company,” reads Safaricom’s application to the court.
The Treasury owns the other 30 per cent stake in Telkom Kenya.
Safaricom is also seeking an interim injunction to stop Telkom Kenya from disposing of its assets, including land and telecommunication equipment.
It also wants the court to order Telkom Kenya to either deposit Sh639 million in cash with the court or issue a bank guarantee or insurance bond of an equivalent amount.
The transaction details between France Telecoms and Helios are still under wraps. It is not yet clear who will cater for the debts previously owed by Telkom Kenya.
The cash-strapped telco owns real estate valued at Sh13 billion, according to a leaked report seen by the Business Daily ahead of the sale.
It also owns a 23 per cent stake in TEAMs, a 5,000-kilometre undersea fibre optic cable that links Kenya to the global Internet superhighway through Fujairah in the UAE.
The company also has a 10 per cent stake in LION2, a 2,700-kilometre undersea optic cable which connects Kenya to the global network through Mayotte in Mauritius — and an eight per cent stake in the East Africa Submarine System cable.
The former cash-rich State agency also manages the National Optic Fibre Backbone, an inland cable network that runs across the county, on behalf of the government.
Telkom Kenya’s net asset value, however, is not in the public domain.
The company posted €85 million (Sh9.2 billion) revenue in the year 2014, reflecting a five per cent growth.