Confusion reigns over exit of France Telkom from Kenya
An Orange shop in Nairobi. Orange Kenya has been ordered to withdraw a controversial advertisement from all media outlets following a successful appeal by its rival Safaricom. PHOTO/FILE
What you need to know:
- On Monday, sources familiar with the deal informed the Nation that France Telkom, which holds a majority stake in Telkom Kenya, had informed the government of its intention to enter into a transition agreement with a possible buyer to “ensure the change in ownership was smooth and to maintain the quality of service to subscribers.” France Telkom had indicated that it hoped to conclude the deal by June.
- The firm’s subscribers were 2.2 million in the same as yuMobile, which is also exiting the Kenyan market and way below Airtel’s 5.5 million and Safaricom’s 21 million.
Confusion lingers over news of intended exit by France Telkom from the Kenya market after local officials denied such plans yesterday.
The local subsidiary Telkom Kenya come out clearly saying it has no intention of leaving and was looking for a partner to boost its financial position.
“The company is looking for funds ranging from Sh10 billion to Sh30 billion to sustain the business,” Telkom Kenya chief executive, Mr Michael Ghossein, told journalists at press conference held in Nairobi. Mr Ghossein is an appointee of the France Telkom.
On Monday, sources familiar with the deal informed the Nation that France Telkom, which holds a majority stake in Telkom Kenya, had informed the government of its intention to enter into a transition agreement with a possible buyer to “ensure the change in ownership was smooth and to maintain the quality of service to subscribers.” France Telkom had indicated that it hoped to conclude the deal by June.
EXIT STRATEGY
However, when the question on whom between him and his parent company would have more information on the exit strategy, Mr Ghossein said the two are in agreement on the going concern position.
“We are rationed down by colleagues in France, but we are in agreement to seek partnership for Orange Telkom,” said Mr Ghossein.
News of intended exit of France Telkom from Africa market broke in March putting the mobile operator Sh250 million a year contract awarded by government to manage National Optic Fibre Backbone Infrastructure (Nofbi) cable in limbo.
“We wrote to Telkom Kenya about our intention to terminate the contract; we raised concerns on why they should not continue with the contract,” ICT Cabinet Secretary Fred Matiang’i said last week.
Mr Ghossein, however, confirmed the contract is still on. “We are running Nofbi and have five operators currently using it with very good quality,” he said. “Nofbi equipment is in Telkom Kenya premises and no one else has the capacity to maintain it.”
News of the shake-up comes seven years after the firm bought 51 per cent stake in Telkom Kenya for about Sh27 billion. Since then, the company has struggled to keep up with industry standards.
ON COURSE
Orange Telkom’s 2013 annual revenue for instance stood at Sh9.4 billion, compared to revenues of market leader Safaricom which stood at Sh12 billion per month.
The firm’s subscribers were 2.2 million in the same level as yuMobile, which is also exiting the Kenyan market and way below Airtel’s 5.5 million and Safaricom’s 21 million.
Orange Telkom has, however, maintained that the company is still on course, saying that it continues with investments and has ploughed in Sh2.5 billion in capital expenditures.
“Next week we will roll out 3G network in Eldoret and Nakuru,” said Mr Ghossein.
