A consortium led by France Telecom (FT) has won the bid for a 51% stake in state-owned telecommunications operator Telkom Kenya, beating three other bidders, including Telkom SA.
The consortium bid $390 million, and the deal is scheduled to be finalised by the end of the year, says Esther Koimett, Kenya`s investment secretary.
"Their financial bid was the highest, even higher than the government`s reserve price of $300 million," says a spokesman close to the process.
The offer topped the runner-up, Telkom SA, whose offer was $108 million.
The Kenyan government, the majority shareholder in Telkom Kenya, decided to privatise the fixed-line operator earlier this year, by placing a controlling stake up for sale to a strategic equity partner.
The other two contenders after FT and Telkom SA were Reliance Communication, of India, and the LAP Fund, of Libya.
"It does not surprise anyone that FT won the bid, given their position as one of the world`s largest telecoms companies," says the spokesman.
The strategic investor will be required to reduce its stake from 51% to 40%, in terms of the agreement. An 11% stake will be sold off as an initial public offering on the Nairobi Stock Exchange next year.
FT has teamed up with Alcazar Capital, which took a 15% stake in the consortium.
Alcazar CEO Nicholas Bacon says the consortium is looking to invest a considerable amount of money into modernising and rehabilitating Telkom Kenya, which has seen a spate of difficulties over the past few years.
"The Kenyan government worked on the difficulties within Telkom Kenya prior to the privatisation process, to ensure Telkom Kenya was an inviting proposition," explains Bacon.
Telkom Kenya previously stated it would do its utmost to make its operations "debt-free", including meeting the funding of more than 12 000 employee retrenchment packages before the privatisation was finalised.
Double benefits
Bacon says the consortium aims to create growth for Telkom Kenya.
Logistics service provider company Agility is an Alcazar shareholder and has a strong presence in emerging markets. FT will benefit from Alcazar and Agility`s knowledge of the Kenyan market, explains an FT press release.
Bacon notes that Alcazar will, conversely, benefit from FT`s mobile provider Orange brand, which is operational in the West African market.
Telkom Kenya recently acquired a mobile operator licence, worth $55 million, ahead of the privatisation, as part of its reform and sale strategy. The company will roll-out a GSM network in the near future, he notes.
"The GSM operating licence, coupled with the Orange brand, will help secure a large mobile market share in the East African market."
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