Finance minister: Telkom management do not understand market

2 Apr 2012

Kenya’s finance minister Njeru Githae told the Daily Nation that he is not convinced that Telkom Kenya’s current management has understood the dynamics of the Kenyan market, jeopardising its return to profitability. Last month Telkom, which is co-owned by France Telecom-Orange (51%) and the Kenyan government (49%), 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 posted a record loss of KES18.2 billion in 2011, and is believed to be struggling to meet a number of financial obligations. Githae told the paper: ‘We are concerned that the current management seems not to have understood the Kenyan market. This is a problem we have also seen among other companies operating in the country, like those from South Africa and other foreign countries’. However, the Treasury is thought to be reluctant to take on a management position at the firm, despite being expected to keep the company afloat using taxpayers’ money. Githae added: ‘We are not interested in any position at the firm’. Telkom CEO Mickael Ghossein, is said to have indicated his willingness to surrender his position, if that is what is needed to turn the company’s fortunes around, but the government has not yet communicated such a demand. Despite reports to the contrary, Telkom Kenya has called for an Extraordinary General Meeting (EGM) on 11 April, at which it is expected to ask its shareholders to finance its growth strategy. Githae confirmed: ‘Telkom has only told us that the money needed is for strategic planning. I believe the company has enough money to repay its loans’.

Kenya, Telkom Kenya