A consortium led by France Telecom (FT) has won a 51% stake in incumbent Telkom Kenya with a USD390 million offer, reports Reuters. ‘We got the highest bid from France Telecom…which is way above our reserve price…of USD300 million, so we are very happy,’ Kenyan Investment Secretary Esther Koimett said. FT is now expected to turn around the loss-making business and prepare it for an initial public offering (IPO) on the Nairobi Stock Exchange. Other contenders for the Telkom Kenya shareholding were Reliance Communication of India, South Africa’s Telkom and LAP Fund of Libya.
Telkom Kenya has a monopoly on landline services. Many users have complained that inefficiency and corruption have made its services too expensive.
Meanwhile the incumbent’s 60% holding in cellco Safaricom has been transferred to the Treasury. The stake is valued at KES64 billion (USD963.8 million). Treasury Permanent Secretary Joseph Kinyua said that the separation of Safaricom from Telkom Kenya would attract a genuine investor in Telkom who saw value in the company rather than its share in Safaricom, and at the same time allow Telkom to offer wireless services in competition with its former subsidiary. Safaricom is the largest of Kenya’s two cellcos, with close to eight million subscribers and a 75% market share at the end of September 2007. The government is in the process of preparing to offload a 25% stake in Safaricom in an IPO expected in December.