Mergers, Acquisitions and Financial Results

The Kenyan Government said last Wednesday that it planned to complete the sale of state-owned monopoly Telkom Kenya by mid-2005 after restructuring the firm to catch the attention of strong strategic investors. The sale collapsed in 2001 after the government rejected a bid for a 49 percent stake in the company by a consortium led by Zimbabwe’s Econet Wireless as too low.

The government said in an Economic Recovery Strategy unveiled on Wednesday that it would seek to return Telkom to profitability before it proceeds with the sale. Officials said reforming Telkom will involve reducing its work force, and expanding and modernising its network. "We want to make Telkom Kenya more attractive before we sell it," Andrew Ligale, the assistant minister for transport and communication told parliament.

Ligale said the government planned to sell 25 percent of its shares in Telkom to a strategic investor and offload a further 20 percent stake through an initial public offering at the Nairobi Stock exchange. Previously the government had offered a 49 percent stake to a single strategic buyer.

The government said that apart from privatising Telkom, it planned to license a second national fixed line operator by the end of fiscal year 2004/05 (July-June).

The move is expected to raise teledensity in rural areas to four fixed lines per 100 people from the current 0.16 fixed lines, and to 20 fixed lines per 100 people in urban areas from the current four lines. The government will also stop Telkom’s monopoly on provision of internet gateway services by licensing four other providers. The government is expected to license a third mobile provider from December 2003 from a list of five short-listed companies.

Reuters via Liquid Africa