Kenya has yet to contribute an additional KSh2.4bn (US$28m) to Telkom Kenya, as the 30 June deadline for government support is looming, according to local newspaper Business Daily citing economic secretary Geoffrey Mwau.
If the Treasury decides against…
Kenya has yet to contribute an additional KSh2.4bn (US$28m) to Telkom Kenya, as the 30 June deadline for government support is looming, according to local newspaper Business Daily citing economic secretary Geoffrey Mwau.
If the Treasury decides against injecting more cash into the struggling operator by that deadline, its shareholding will stay at 30%, as compared with the 40% stake it owned until late last year.
The report explains that in December last year, France Telecom Orange saw its stake in Telkom Kenya increase from 60% to 70% after infusing KSh5.1bn (US$59m) into the company and writing off the balance of its shareholder loans.
The government only paid KSh2.5bn (US$29m), short of the KSh4.9bn it was expected to contribute to maintain its shareholding level. It also wrote off some loans
Orange first acquired a 51% stake in the operator in 2007 for US$390m. Its interest in Telkom Kenya rose to 60% in November last year following a similar debt-into-equity conversion.
Overall, the Business Daily estimates that the telco has borrowed Sh48bn (US$559m) in shareholder loans since 2007.
Meanwhile, another Kenyan mobile operator, Yu Mobile, is seeking cash from potential strategic investors to pay its suppliers. Vietnam’s Viettel is rumoured to be among the interested parties.
Yu had previously received a Sh13bn (US$150m) capital injection from parent company Essar to pay off its debts.
Binta Drave, Equity Analyst at Exotix, told TelecomFinance in October that “[Yu’s] competitors Airtel and Orange Kenya are also loss-making. The only way these companies can finance their operations is to rely on their parent company or borrow money.”
Orange was not immediately available for comment.
