Orange Telkom Kenya settling Debts ahead of eventual Exit of Market

Yesterday, we told you Orange had begun laying off part of its staff in a workforce rationalization plan spearheaded by PricewaterhouseCoopers with 500 employees from its 1,600-strong workforce affected.  In Late 2015, we announced that France Telkom Orange would offload its 70% in Telkom Kenya marking the exit of the player in the Kenyan market.  The move was initially announced by Finance CS Henry Rotich in October, who stated the talks were in the final round. Helios Investment Partners announced they would acquire the stake.

The announcement of the deal led to claims from the Communications Authority of Kenya demanding  Kshs. 1.5 billion debt to get approval for the sale. The debt comprises accrued frequency and operating fees for 2014 and 2015.  Safaricom also put up a demand of Kshs. 639 million for failure to pay interconnection fees, and some liabilities it inherited from a tower sharing deal with Essar Telkom Kenya, which is now non-operational. The other claimant was former Telkom Kenya employees laid off between May and June 2006 for which the company settled for Kshs. 1.8 Billion.  The Communications Authority of Kenya had said it may put a demand of Kshs. 800 million in addition to the Kshs. 1.5 Billion if Orange does not exit the market by the end of the financial year.

According to local paper Business Daily,  Telkom Kenya has promised to pay the arrears it owes Safaricom by May 1st 2016. It has also paid The Communications Authority Kshs. 300 Million  in part settlement for the Kshs. 1.5 Billion the firm owes. The treasury will offset the remaining Kshs. 1.2 Billion the paper reported. The payment now opens way for the completion of the sale of the company to Helios.