The Kenyan Government has taken full control of Telkom Kenya after acquiring a 60% stake in the company from the UK-based private equity fund, Helios Investment Partners. The deal was worth Ksh 6.09 billion and puts Telkom Kenya under the government’s control.
Telkom Kenya has always struggled to compete in the telco space with the likes of Safaricom who seem to enjoy stable growth. At the moment, Safaricom has 67% of the 36 million mobile users in Kenya. This can be attributed to its mobile money service, M-Pesa, that has really cemented its presence in Kenya’s financial sector.
The complete acquisition of Telkom Kenya was made a few weeks before the inauguration of President William Ruto according to the documents tabled by Parliament. The documents show that this was one of the strings of expenditures that the Treasury incurred without the approval of Parliament in the weeks to the inauguration.
“We bought the shares for Sh6 billion after Helios threatened to quit,” said the top Treasury official who spoke to the Business Daily. “We bought the shares because the government was afraid Helios was going to sell to an investor that did share the same vision with us in the turnaround of Telkom Kenya.”
It is not clear why Helios threatened to quit but the downward trajectory Telkom Kenya has been experiencing might be the main factor. Telkom has been losing subscribers over the years. This can be due to its low data speeds that push subscribers to search for alternatives.
Telkom Kenya saw a 19% drop in subscribers between 2019 and June this year and this might be an indication of what is to come and Helios might have thought they should exit before things get worse. The telco hasn’t had any innovative products to rival its competitors and the downward trajectory was unavoidable.
It will be interesting to see what happens now and if being under state control can help Teclkom in any way.
Read: Safaricom’s fixed data market share dropped by 2.4% to 34.3%
