The government is looking for a strategic partner who can take on Telkom’s current debt of KSH 7.2 billion. The move is meant to save the telco that is sinking into debt.
Moreover, the government sees the move as critical to reducing the risk of spying on critical government information. Telkom’s network infrastructure is used by government agencies including the military.
As an alternative, the government may look to the National Treasury to bail out Telkom with funds from public coffers.
Information, Communication, and the Digital Economy Cabinet Secretary Eliud Owalo told parliament: “We are in a situation where Telkom is unable to pay. We are exploring ways and means of getting support and intervention from the National Treasury if any”
Furthermore, Broadcasting Principal Secretary Prof. Edward Kisiang’ani, says Telkom’s legal status is contestable. Currently, a number of Telkom’s 723 Towers have been shut down by American Tower Corporation (ATC)
Today, Kileleshwa Members of the County Assembly (MCA) Robert Alai, lamented on the lack of internet connectivity on the network for the past 2 months.
Telkom responded to his complaints by stating: “our team is working to resolve this with utmost priority as soon as there’s an update it will be communicated”
Will the Investor Succeed?
Currently, the government of Kenya fully owns Telkom. Having stated their intentions to get in a strategic investor, the public will wait to see how that plays out.
In the past, Telkom has had external investment from France Telecom (Orange) and Helios Investment (Jamhuri Holdings Ltd). On both occasions, Telkom did not experience any significant change of fortunes.
In admitting defeat and exiting the market both investors pointed the finger at the government.
As part of a recent media interview, Helios chief financial officer (CFO) Paul Cunningham again pointed a finger at the government.
He said: “The overriding thought was that we were still partners with the government of Kenya in this deal so we still felt that we could do something to turn around this investment and we didn’t want to completely alienate our partners even though they were taking steps that were against the interest of Telkom Kenya itself.”
The CFO accurately predicated that the government will seek to bring in an investor. However, he expressed his reservations on the attractiveness of the partnership.