The Treasury has acquired a 60 percent stake in Telkom Kenya from UK-based private equity fund, Helios Investment Partners, for Sh6.09 billion, making the company fully State-owned.
France’s Orange bought a majority share in Telkom Kenya when it was privatised in 2007 but then sold its stake to London-based Helios Investment in 2015 for undisclosed fees. The deal marks a rare return of a privatized company to State ownership, derailing initial plans for the listing of Telkom Kenya at the Nairobi Securities Exchange (NSE) through an initial public offering (IPO).
At Sh6.09 billion, the deal values Telkom Kenya at Sh10 billion, equivalent to one percent of the Sh1 trillion valuation of Safaricom—the dominant market leader.
According to Treasury, the government exercised its pre-emptive rights after Helios notified the government of its intention to exit Telkom. Pre-emptive rights are privileges extended to shareholders, giving them preference to buy the stake in the business should one of the owners opt to exit.
Telkom Kenya, which is Kenya’s third-biggest telecommunications company by users, has been losing subscribers in recent years. The operator’s mobile phone subscribers dropped from 4.23 million users in 2019 to 3.42 million in June, representing a 19.1 percent fall, in a period when its rivals—Airtel and Safaricom have gained customers.
Treasury sources reckon that Helios lost interest in Telkom after its merger with Airtel Kenya collapsed. The operator in August 2020 said it was no longer looking to merge its business with Airtel, citing challenges of securing the required regulatory approvals for the deal.