Telkom Kenya and Airtel, on February 8, 2019, signed a commercial agreement to merge their operations. The scope of the deal will only involve mobile as well as enterprise and carrier services. This means Telkom’s real estate portfolio will not form part of the deal.
This appears somewhat mischievous because, according to a 2015 valuation, Telkom’s real estate was approximately Sh13 billion, comprising mainly land, buildings, sports clubs, undersea fibre optic cable and frequency spectrum.
More troubling is the fact that the shareholding of the new firm, Airtel-Telkom, will be determined at the close of the transaction. Legally, the two entities will have ceased to exist and their operations and share stocks surrendered to the new outfit, Airtel-Telkom.
Yet, the shareholding and share value will remain unknown until the end of the transaction. This may be a pointer to a mega economic fraud against the taxpayer. Currently, 60 per cent of Telkom is owned by British private equity firm Helios Investments, who bought out France Telecom, while 40 per cent is owned by the Government of Kenya.
Despite all signs pointing to a scam, the merger deal has received thumbs up from some of the regulatory agencies such as the Competitions Authority of Kenya and Capital Markets Authority. Reports show Telkom Kenya would transfer its mobile, enterprise and carrier businesses to Airtel in exchange for shares in the new entity, Airtel-Telkom. This implies that Airtel will be absorbing Telkom Kenya which is a public entity.
It seems, therefore, approvals already obtained have ignored the losses taxpayers may incur in the transaction. The Ethics and Anti-Corruption Commission (EACC) is, so far, the only institution that has portrayed itself as a protector of public interest in this matter.
The Senate and Telkom’s CEO had claimed the EACC had cleared the deal because the firms were private companies which are not subject to the State Corporations Act. However, later, EACC declared it had not cleared the deal, noting it will ensure public funds are not lost in the deal.
The 40 per cent stake the public have in Telkom must be protected at all costs. Leaders must ensure the deal is above board, especially after indications the deal is not keen on the interests of the public.