The Cabinet has announced its decision to cancel the government’s purchase of a 60 percent stake in Telkom Kenya valued at slightly over Sh6 billion.
In an official statement, the Cabinet explained the rationale behind its decision to rescind the sale indicating governance challenges arising from the nationalization of Telkom Kenya and concerns about the company’s commercial viability.
“In addressing the governance challenges posed by the nationalization of Telkom Kenya Limited in the run-up to last year’s General Election, Cabinet rescinded the decision that the Government of Kenya shall purchase from Jamhuri/Helios 60 percent of the ordinary shares of Telkom Kenya,” the dispatch from Cabinet reads.
President William Ruto’s government has also given Telkom Kenya the green light to search for a new strategic investor to provide capital and support future growth and expansion plans.
The Cabinet’s move comes after Helios, a London-based private equity fund, exited its investment in Telkom Kenya in July 2022 through a put option exercise, which was part of the purchase agreement.
Collapsed venture
Helios’ decision to exit its investment was primarily triggered by the collapsed joint venture between Airtel Kenya and Telkom Kenya in 2019, which raised concerns about the telecommunications company’s commercial viability.
President William Ruto’s government has also given Telkom Kenya the green light to search for a new strategic investor to provide capital and support future growth and expansion plans.
The government’s failure to honor commitments that would have injected commercial viability into Telkom Kenya was another key factor in Helios’ exit.
The Cabinet’s intervention not only cancels the purchase but also requires Jamhuri/Helios to refund the Sh6.091 billion paid for the stake.
Additionally, Telkom Kenya now has the opportunity to seek and onboard a new strategic investor, subject to regulatory approvals. The Cabinet believes that its decision will enhance Telkom Kenya’s operational capacity, making it a competitive player in the telecommunications market.
While this development may bring clarity to the Telkom Kenya situation, Finance Cabinet Secretary Ukur Yatani previously stated that the shareholding status had not been changed at the State law office due to the improper constitution of the Telkom Kenya board at the time of the buyout.
Yatani argued that the government’s payment for the stake had been approved by the National Security Advisory Council, which wanted Telkom to be fully government-owned due to its involvement in critical security installations and services.
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