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Telkom Kenya puts Sh1b property up for sale

BUSINESS
By Moses Michira | September 23rd 2015

Struggling mobile phone operator, Telkom Kenya has put several of its prime assets up for sale to help reverse its declining fortunes.

The company, 70 per cent owned by France’s Orange with the Kenyan Government as the minority shareholder, listed 17 properties on the market with a price tag of just about Sh1 billion.

The asset sale is the last of a string of events that have painted the difficulty that Telkom Kenya finds itself in, even after shareholders injected billions in additional capital to revive the business. Its market share on the various product lines has been on a steady fall, subsequent industry statistics have revealed.

Most of the assets earmarked for sale are residential houses and commercial buildings spread across major towns, including Nairobi. The firm has denied previous requests for information about the disposal from the Standard, prior to the listing that happened just this week.

A commercial property along Kisumu’s Oginga Odinga Street is its priciest property that is on the market at Sh260 million, according to the listing. Others on the list include a partially complete building in Nairobi’s Embakasi area with a price tag of Sh146 million – a firm pointer to the financial strain that the company was undergoing.

Helios Partners

Telkom Kenya has been unable to turn a profit, even before the entry of the French who were expected to turn around the prospects of a limping parastatal that offered fixed line connectivity. Disposal of the assets comes amid power struggles that have forced the French firm to opt out and is believed to be seeking a buyer for its 70 per cent stake.

Helios Partners, a UK private equity firm, has variously been linked with the buyout of the French firm. It is not, however, clear if the asset disposal would be completed before the French walk out, to pave the way for a second UK company into the sector that is dominated by Safaricom, majority owned by another London-listed firm Vodafone.

Orange has, however, been clear about its unease in dealing with the State as a shareholder, even citing in its parents’ latest annual report that it had lost control in the firm despite owning a clear majority stake.

“During the fourth quarter, due to continuing disagreements with the Government of Kenya, Orange concluded it was contractually unable to implement any solutions to the challenges facing the business...,” the company’s financial report reads in part.

Telkom Kenya was an asset rich corporation with buildings in nearly all major towns in the country, which it retained after the mother parastatal was split to form the Postal Corporation and Safaricom, for strategic reasons. Two commercial buildings in Nyeri have also been listed for Sh228 million.

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