EGYPTIAN FIRM TO PARTNER WITH TELKOM IN KENYA
An Egyptian company has won the tender for joint ownership of Telkom Kenya's loss-making handsets division. The Egyptian Telephone Company beat five bidders, including Kenya Power and Lighting Company to clinch the joint venture bid for Gilgil Telecommunications Industries (GTI,) an assembler and manufacturer of telecommunications products.
The company plans to invest $24 million (Sh1.6 billion) in GTI, but wants 70 per cent of the company, leaving the rest to Telkom. However, Telkom managing director, Sammy Kirui, said yesterday that the two parties would go into further talks, in order to agree on how to split the shareholding. He said Telkom's initial plan was an outright sale of GTI, but realised buyers were interested in stripping the company of its assets. "To achieve the initial objective of GTI complex we thought we had to retain some shareholding so that we can have a say in the management of the company," Kirui told reporters at his Nairobi office after announcing the winner.
The GTI complex comprise a mechanical workshop, electronics workshop, maintenance centre, carpentry workshop and a pole treatment plant. When GTI was established it had a ready market in the monopoly provider, but after liberalisation of the telecommunications industry, it faced stiff competition as other players were licensed to procure and sell customer products, such as telephone sets, that were also assembled at GTI.
Before GTI retrenched its 331 employees early this year, Kirui said Telkom was spending Sh5 million (US$72,000) every month to pay staff of the loss-making subsidiary. The Egyptian firm said it would employ 278 employees immediately.
"You have given us the opportunity and we will fulfil your expectations," company's Anwar Hussein told Mr Kirui. Mr Kirui said a team sent to Egypt to find more information about the company found that it had successful track record in acquiring privatised telecommunications manufacturing facilities in Africa.
In February the government approved the corporate restructuring of Telkom with a view of making it a viable telecommunications company. As part off the restructuring process the government authorised among other recommendations the divestiture of loss making subsidiaries.