Stricken Telkom seeks KES10.9bn bailout to ease crippling debt

22 Mar 2012

Telkom Kenya, which is co-owned by France Telecom-Orange (51%) and the Kenyan government (49%), has reportedly asked taxpayers to foot a KES10.9 billion (USD129.6 million) rescue package to help secure the company’s short-term future. The telco, which posted a record loss of KES18.2 billion in 2011, has around a week to raise KES5.8 billion to repay an outstanding bank loan that is due by the end of the month. The East African, citing ‘interviews with insiders and confidential documents prepared by management’, reports that the company is on the verge of a liquidity crisis that could see the firm default on its bank loans and other supplier debt. The emergency loan is required to repay two unsecured loans that Telkom Kenya took from Standard Chartered Bank, amounting to KES7.6 billion. It also owes Kenya Commercial Bank (KCB) KES1.5 billion to cover an overdraft loan, which is due for renewal in August 2012, as well as a KES1 billion one-year loan due for renewal in November.

In related news, Business Daily Africa reports that FT-Orange has scrapped the most senior position held by a Kenyan national at the company, in a bid to firm up control of the ailing company. The restructuring has seen the exit of Jane Karuku who held one of the two deputy managing director positions. Telkom CEO Mickael Ghossein commented: ‘I have had two deputy CEOs; one has left and I am not going to replace her because we have scrapped that post. The second one will stay until 2013 or probably longer … The restructuring has nothing to do with what is appearing in the press [regarding the company’s financial position], but is meant to cut the level of reporting structure that we had’. Besides supervising the three heads of departments, Ms Karuku’s responsibilities also included supervising government relations, a job that Ghossein will now take responsibility for.

Kenya, Orange Group, Telkom Kenya