Telkom Kenya gets loan for 3G licence
Telkom Kenya will get a shareholder loan from the Government to enable the operator pay a Sh800 million ($10 million) licence fee for third generation (3G) Internet services, a senior Treasury official has said.
The Government has a 49 per cent stake in Telkom, with the rest held by France Telecom.
After paying Sh31.2 billion ($390 million)for the stake in 2007 the French firm said it could not trace some assets and demanded a refund.
"We are giving them a shareholder loan through which they will pay (for 3G licence). This is funded by Telkom through a shareholder loan by the Government," Esther Koimett, Investment Secretary at the ministry of Finance, told Reuters.
Although she did not say how much the loan will be, the communications regulator charges operators $10 million for a 3G licence, under a new fees structure unveiled this month.
Telkom was the sole fixed telephone operator in east Africa’s largest economy before the advent of mobile phones. But mismanagement turned it into a perennial loss-maker.
It launched a mobile phone service called Orange in 2008 after coming under France Telecom’s control but has yet to return to the black, largely due to the dominance of Safaricom.
Majority held by Britain’s Vodafone, Safaricom has a 78 per cent market share and the only 3G licence in the market, for which it paid $25 million in 2007.
Mai Barakat, an analyst at Informa Telecoms said the deal between France Telecom and the Government will not help Telkom to take on Safaricom head-to-head.
"Orange needs to strongly work on their branding and focus more on which target of the market will be most profitable for them in order for them to compete against Safaricom," Barakat said.
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Under the terms of the agreement, the Government undertook to clear all unpaid service bills owed to Telkom by ministries and departments.
Koimett rejected a report in a local paper the Government had ceded its 20 per cent stake in an undersea fibre-optic cable linking Kenya with the United Arab Emirates.
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