INVESTMENT: Jamhuri Holding Limited (JHL) through its parent company, Helios Investment, issued an ultimatum to Kenya to either fully acquire Telkom or source for strategic investors to take over ownership.

This followed a raft of frustrations and bureaucracies by the government which bogged down the deal. The ultimatum, which was revealed by the former National Treasury Cabinet for Secretary Ukur Yatani, was invoked as per the shareholding agreement between Kenya and UK private equity firm, Helios Investment Partners.

The government then initiated the process of JHL’s exit through the National Security Council (NSC) which pegged the buyback decision as mainly a national security matter and not for commercial purposes.

Ordinary shares

This, according to Yatani led to the full acquisition of all the ordinary shares in Telkom at a token of $1 only despite the Telkom board insisting that the firm’s ownership is still split between the government and JHL.

“Whether the Government of Kenya likes it or not, they (Helios) have already given clear indication that they are exiting. And when they exit, there are only two options, GoK takes over shares of Helios or it has to bring in other shareholders,” Yatani told the Kuria Kimani-led committee on Finance and National Planning committee.

The committee which is investigating the alleged Sh6.14 billion buyback of Telkom by the previous government has since established that the amount was a loan repayment. Yatani further revealed that Helios felt it was being frustrated after the government unprocedurally took over its major assets – about 78 acres of land along Ngong road that is estimated to be worth Sh10 billion. The asset has still not been reverted to Helios, according to the former CS. This, plus the rejection of the Airtel-Telkom merger due to national security concerns exposed Helios to losses in the Telkom investment.“Against that background, a directive was made to me by the national security council. I was directed to implement this issue and provide appropriate budget as required,” said Yattani.

The proposed Telkom-Airtel merger was blocked by the National Security Advisory Committee (NSAC) on grounds of risk to national security since the government would not have much control of critical infrastructures that are critical to government communications services to the State Houses among other highly-guarded areas. The merger would have set the stage for the exit of Helios from the shareholding of Telkom.

Telkom is also reeling under the pressure of some $239 million (Sh30.8 billion) loan that JHL absorbed from Orange East Africa, an amount that the government will be expected to inherit if the full acquisition stands as revealed by Yatani. It also owes Safaricom and America Towers about Sh9.4 billion in total.

Telkom board, with the backing of the current government, has already started a fresh process of soliciting new investors to resuscitate it even as parliament still scrutinises the true legal status and ownership of the company. The investigation on one hand and a lurking acquisition is sending a mixed signal to the market and investors, especially for a company whose ownership has severally changed hands in less than a decade.