Telkom Kenya owes up to Sh47 billion to shareholders, suppliers and regulators. This is part of startling revelations made on Tuesday by Telkom Kenya Board Chairman Eddy Njoroge and Communication Authority of Kenya Director General Ezra Chiloba.
The two appeared separately before a joint parliamentary inquiry into the controversial Sh6 billion transaction where the government was seeking to buy out Helios Investment Partners a few days to last year's General Election.
"The Sh6 billion was not disbursed to Telkom Kenya in part or in whole and we only knew of the amount after the fact," said Mr Njoroge.
Njoroge, who has served on the Telkom Kenya board since 2011, was hard-pressed to explain how the transaction was conducted without board approval in record time during a political transition.
"I first became aware of the transaction through a letter from Jamhuri Holdings Limited dated 11th August 2022 which was a share purchase agreement dated May 2022 stating that the shareholders of Telkom Kenya have agreed to transfer shares to the government of Kenya," he said.
The letter indicated that the transaction would involve 71.2 million ordinary shares of Telkom Kenya valued at Sh20 each, which puts the value of the 60 per cent stake held by Helios at Sh1.4 billion.
This would have transferred the ownership of the 60 per cent stake held by Helios to the government, making Telkom Kenya a State-owned enterprise.
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"The transaction was valued at a nominal $1 (Sh140) and the Sh6 billion was not to purchase the shares but to offset the shareholder debt.
"There was a $51 million (Sh7.1 billion) loan that Helios had put in from 2016 when they came into Telkom and there is another $199 million (Sh27.8 billion) that is legacy debt from the days of France Orange Telkom and an additional $40 million (Sh5.6 billion) in interest payments on that legacy debt," explained Njoroge.
The chairman said he was asked to convene a board meeting to ratify the transaction and also to sign a resignation letter that was un-dated and that would come into effect on the date that the transaction went through.
One day after receiving the letter from Jamhuri Holdings, Njoroge said he received another letter from Treasury Cabinet Secretary Ukur Yatani on August 19 indicating that the government had approved the transfer of shares.
Njoroge said he wrote back to Mr Yatani on August 29 to indicate that there was no quorum to hold a board meeting, raising questions over the due diligence on the deal and the fate of the company's 600 employees.
But he was put on the spot to explain how he did not know about the transaction given that Helios had indicated it would exit the telco after merger talks with Airtel Kenya collapsed in 2021.
When Mr Chiloba took the hot seat, he revealed that Telkom Kenya owes an additional Sh9.4 billion which needs to be paid before a transaction involving transfer of shareholding is effected.
"Telkom Kenya owes the regulator Sh7.2 billion that stands unpaid today. This has since risen to Sh9.4 billion including to other service providers, American Towers and Safaricom owing to the fall of the shilling against the US dollar," he said.
Chiloba said Telkom Kenya is due for license renewal next year and that the telco's creditors have been lobbying CA to intervene and ensure the debt is repaid before renewal of the license.
"To us, the transaction is not complete until these conditions are met; there is no plan on how to settle the outstanding Telkom Kenya debt. There is no CR-12 and there's no plan to indicate how consumer interests will be protected," he said.
Parliament will interrogate the owners of Jamhuri Holdings, Yatani and Joe Mucheru over their roles in the controversial deal.