Kenya’s Communications Authority (CA) will reportedly block Orange’s planned sale of its majority stake in Telkom Kenya to private equity firm Helios Investment Partners if a KSh1.5bn (US$14.8m) licencing fee is not paid.
Kenya’s Communications Authority (CA) will reportedly block Orange’s (EPA:ORA) planned sale of its majority stake in Telkom Kenya to private equity firm Helios Investment Partners if a KSh1.5bn (US$14.8m) licencing fee is not paid.
CA director-general Francis Wangusi said the authority can only approve Orange’s request for permission to transfer the shares if it makes the payment, the Daily Nation reported.
“We are asking them to pay up this financial year, they have not paid the fee for the last two years,” Wangusi was quoted as saying. Orange will get another invoice for nearly KSh800m (US$7.9m) in July, he added.
The regulator was also cited saying that penalties accrued over the years and failure to meet minimum quality standards will also be considered when deciding whether or not to grant the approval.
Orange, Helios and CA were not immediately available for comment.
The French incumbent announced last November that it had signed a binding agreement to sell its 70% stake in Telkom Kenya to Helios for an undisclosed sum, seven months after declaring it had “lost control” of the asset. Orange was advised by Lazard.
The Paris-based telco had previously said continuing disagreements with the Kenyan government, which owns the remaining 30% of the operator, meant it was contractually unable to implement planned financing solutions without its fellow shareholder’s consent.
Last month, a local report said the Kenyan treasury would boost its stake in Telkom Kenya to 40%, noting that the government would not pay for the additional shares, but “is being paid in kind for not exercising its pre-emptive rights as contained in the shareholder agreement”.
The report stated that the deal price included shareholder loans worth some US$225m, adding that the company had posted FY 2015 operating losses of KSh4.3bn (US$42m), with this figure expected to rise to KSh10bn (US$97m) for FY 2015.
According to the Daily Nation report, Helios is still in talks with the government about the deal and a key topic of discussion is how debts will be cleared as Orange exits the market.
Telkom Kenya is the sole provider of landline telephone services in the country and is the third largest mobile operator with four million customers, giving it an 11.8% slice of the market as of the end of September 2015, according to CA figures. Safaricom is the mobile market leader, while Airtel and MVNO Equitel are the smallest players.
