UAE-based Infrastructure Corporation of Africa LLC (ICA) will take over 60% of shares in Telkom Kenya after the Kenyan cabinet rescinded a deal between a previous administration and London-based private equity firm Helios for the nationalisation of Telkom, citing “governance challenges” in that transaction. The finance ministry said it had decided to abandon nationalisation of the company and launched a search for a new strategic investor in January this year, which identified ICA as the winner.
“The offer by ICA includes capital injection to fund Telkom’s critical infrastructure and the overall upgrade of the company’s capabilities, and also settle some of the outstanding liabilities of the company,” the ministry said in a statement.
The new deal will see Helios transfer the majority stake to ICA, the ministry said, without disclosing the financial details of the deal with the UAE company. On its part, the Kenyan government will retain 40% shareholding, while spearheading regulatory reforms to correct the imbalances in the telecommunications industry, the Treasury said.
The move, however, could create uncertainty for foreign investors who usually do not like to see drastic changes in policy, including cancellation of sealed deals, whenever a new government takes over, Nairobi-based legal experts have said.
Telkom is the smallest operator after Safaricom and Bharti Airtel, but it runs some key assets relied on for government communications, including a national fibre-optic network.
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