Safaricom asks court to block Telkom Kenya sale over Sh640 million debt

Telecommunications company Safaricom has filed a certificate of urgency before the High Court in a bid to block Telkom Kenya’s sale.

Safaricom told Justice Farah Amin that it would not be able to recover Sh639.8 million it is owed by Telkom Kenya if Orange Group transfers a 70 per cent stake to UK-based Helios Investment Partners.

According to Safaricom’s lawyer, Stephen Kiptinness, Telkom initially owed Safaricom Sh760,063,934, but had so far paid Sh120,273,771.57.

“The respondent’s parent company, Orange Group, having announced the finalisation of negotiations and the signing of a binding agreement for sale of the respondent’s shares held by France Telkom, will at any time finalise the sale. Unless temporally orders are issued to the applicant, it will suffer irreparable financial losses and damages,” the court heard.

In its court papers, Safaricom said it had entered into an interconnection agreement with Telkom, which was to see the two telecoms exchange local traffic between their networks. This deal was to cost Sh428,905,487.45.

Safaricom added that Telkom had a site-sharing deal with dissolved Essar Telkom Kenya. The judge was told that Safaricom is entitled to Sh99,620,277.98 accrued in the deal, as it acquired Essar’s rights after acquiring its assets.

Reputable bank

Further, Mr Kiptinness said there was another similar transaction between his client and Telkom, which demanded that Safaricom be paid a further Sh109,936,105.08.

For carrier services, the lawyer told the court that Telkom owed another Sh121,602,277.98.

“The respondent’s parent company ... issued a press release announcing the signing of an agreement for acquisition of the 70 per cent majority share. If the sale is concluded, the applicant will not be able to recover its money,” Kiptinness said.

Safaricom wants the court to temporarily block the sale and have Telkom deposit the monies it says it is owed into a bank account.

As an alternative, the lawyer asked the court to order Telkom to deposit a guarantee from a reputable bank to secure the debt.

“Pending the hearing of the applicant’s case, the court should issue a temporally injunction against the respondent’s employees, servants or agents, restraining them from removing, transferring, disposing or interfering with its assets, land, shares and monies held in its accounts,” Kiptinness said.

The case will be heard today.