Mergers, Acquisitions and Financial Results

Telkom Kenya's restructuring programme will save the company Sh4 billion operations costs, managing director Sammy Kirui has said. Kirui said the savings will be realised from a lean and efficient workforce and sell of Telkom Kenya's Safaricom shares. Early this year, the company started a programme to lay off an estimated 12,000 non-core workers in an exercise that will cost the company Sh12 billion.

"The International Finance Corporation, the World Bank's private sector lending firm - is currently evaluating the value of Safaricom shares," Kirui said. He said the first phase of the retrenchment programme affecting 2,600 ex-workers had ended, and will enable the company achieve savings of Sh90 million per month. Kirui said the State utility company is now sourcing for more money from local banks to facilitate the second phase of the programme.

He, however, declined to state the amount, but hinted that the programme will start mid next month. Telkom Kenya is one of the state corporations in Kenya that the Government has lined up for sale by April next year.

The restructuring, he said, is meant to make the company viable ahead of the intended sale next year. President Kibaki announced that the sale will be conducted at the Nairobi Stock Exchange (NSE), where 34 per cent of the shares will be offloaded through an Initial Public Offer, while 26 per cent would be sold to a strategic investor.

IFC's valuation of Safaricom is crucial because part of the funding to support Telkom Kenya's restructuring project is expected to come from the sale of mobile firm shares. Under the arrangement, nine per cent of the Safaricom shareholding will be sold to finance the sale of Telkom Kenya. Telkom Kenya owns 60 per cent of Safaricom, while Britain's Vodafone owns 40 per cent. Vodafone's bid $100 million Sh7.3 billion for the Safaricom stake. The East African Standard