Telkom Kenya owners pump Sh30bn after Helios deal

Telkom Kenya shareholders will inject Sh30 billion into the loss making company in a fresh capitalisation agreement signed with Helios Investment Partners on Friday.

This follows completion of the sale of a 70 per cent stake that France Telecom held in Telkom Kenya.

Under the sale agreement, Helios acquired the stake and agreed to transfer a 10 per cent share to the Government of Kenya (GoK) for a consideration of Sh1, increasing the government’s shareholding to 40 per cent.

Telkom Kenya is expected to repay the shareholder loans based on the new shareholder structure, meaning that the government will be receive Sh12 billion without contributing a cent. Helios will receive Sh18 billion.

Helios has registered Jamhuri Holdings Limited as the local company to take over the shares.

The firm also announced that it would release a new management structure Monday, which will see the positions of chief executive officer, chief finance officer and chief technical officer get new office bearers.

The new structure is also expected to reduce the number executives reporting to the CEO to four from the current nine. 

Treasury secretary Henry Rotich, said that although Telkom Kenya has been facing a number of challenges for a long time, the government is optimistic that it would turn around the firm under the new partnership. 

“We have seen the positive impact of Helios’ investments in other sectors of our economy and we hope and trust that their investment in Telkom Kenya will have a transformative impact on the operations and standing of the company,” Mr Rotich said during the signing of the sale agreement.

Eddy Njoroge has been retained as chairman of the Telkom Kenya board. Mr Njoroge said the new shareholders had agreed to restructure the management and the new team would be unveiled on Monday.

“The company is confident that the combination of the Helios’ expertise, resources, experience and track record in investment across the continent will be invaluable contributors to Telkom Kenya’s transformation,” Mr Njoroge said. Last week the Competition Authority of Kenya (CAK) gave its approval for the deal.

Until 2012, the government had a 49 per cent stake in Telkom Kenya while France Telecom held the remaining 51 per cent.

But the State ceded a nine per cent stake in December 2012 following a Sh30 billion debt write-off before losing another 10 per cent last June after it failed to inject Sh2.4 billion in a Sh10 billion rights issue.

The entry of Helios into Kenya’s telecommunications sector is expected to step up competition for Airtel and market-leader Safaricom, which dominates both the voice and data markets.

The deep-pocketed private equity fund is expected to inject into Telkom Kenya the required capital and bring in a strong management team that can turn the loss-making telco to profitability.