Mergers, Acquisitions and Financial Results

After failing to get Vodacom to pay enough money for its 60% stake in Safaricom to finance the Telkom Kenya redundancy package, the Government has announced that it will hold on to its stake. Meanwhile Telkom Kenya continues to haemorrhage cash paying wages to unproductive staff members as the Government dithers.

Information and Communications Permanent Secretary James Rege said the Government would retain its 60 per cent stake in the mobile phone service firm to benefit from its profitability.

The Government has a 60 per cent shareholding in Safaricom through Telkom Kenya, a fully owned State corporation. Telkom, national fixed line phone service provider, is set to undertake a comprehensive restructuring programme that is, among other things, expected to see the corporation offload 12,000 of its bloated workforce of 18,000.

It is estimated that the company needs about Sh10 billion to fund the programme.

The huge financial burden has led to calls on the Government to sell its stake in the mobile phone company to raise funds for the reform programme.

Rege, however, confirmed that Vodafone, which has a 40 per cent stake in Safaricom, had asked the Government for first consideration should the state opt to sell its stake.

He denied that any discussions were ongoing on the matter as the Government's immediate task was to oversee the restructuring of Telkom Kenya.

Mr Sammy Kirui, the Managing Director of Telkom Kenya, said PKF Consulting had finalised its assessment of the corporation and presented a report to the Telkom management.

"We are studying the report and will advise the Government accordingly," he said.

Rege said excessive staff at Telkom must go for the company's turnaround strategy to succeed.