Business Daily (Nairobi)
Kui Kinyanjui
8 January 2008
France Telecom, the company that bought a 51 per cent stake in Telkom Kenya last month, has no plans to revise the deal despite the recent outbreak of violence, contrary to fears by business analysts.
Mr Dominique Saint-Jean, who took over as Telkom Kenya's managing director last month said the Sh26 billion deal was on course and that plans were underway to roll out a medium term growth plan.
The firm will specifically target service improvement a GSM network and improvement of the broadband network.
"I can reassure customers that this deal is solid and France Telecom is committed to it. There is no threat at all from the recent occurrences on the political scene," said Bernard Rubia, the chief communications officer at Telkom Kenya.
Analysts had raised fears that the sale of Telkom Kenya may be one of the casualties of loss of investor confidence in Kenya following last week's outbreak of violence.
Richard Segal, the head of fixed income at Renaissance Capital, had said that violence may force investors in recent deals - such as Telkom Kenya- to activate 'get-out' clauses or pull out of the deals due to fears of continued viability.
Last year was poised to be Telkom Kenya's best year in terms of development of new products and services.
The company said that despite depressed earnings from corporate customers during the last two weeks, it had surpassed the target for its wireless service -having signed up more than 40,000 customers since the year began.
"We have had overwhelming customer support irrespective of the violence. Our infrastructure of calling cards was not affected at all and there was no major shift in terms of downtime because of the violence," said Mr Rubia.
Last year, Telkom shrugged off the image of being a run down government parastatal to become one of the star performers in the telecoms sector.
It saw the completion of a seven-year wait for the privatisation of the national operator.
"If someone came to you at the beginning of 2007 and saying they wanted to give you Sh26 billion for Telkom Kenya, you would be excused for laughing it off," said Aly Khan Satchu, a financial analyst.
At the beginning of the year, Telkom's landline business was under siege from increased competition from mobile phone service providers and the high costs of maintaining the network.
The subscriber base slid from a peak of 320,000 in 2002 to 280,000 in 2006.
But by the middle of 2007, the company started to reap the benefits of its recovery plan.
Roll out of a fixed wireless network based on CDMA boosted the subscription rate to an average 2,000 per day.
In late November, the final piece in Telkom's transformation came into play. France Telkom paid Sh26 billion for a 51 per cent stake in the incumbent operator.
The transaction is planned to close before the end of the year. Telkom Kenya serves over 280,000 fixed line customers and will benefit from a new mobile licence.
France Telecom hopes to develop convergent telecommunication services, bringing a new mix of mobile, fixed and Internet based services to the market.
The company pegs its hopes on it newly acquired unified telecommunications licence, which will give Telkom Kenya access to both fixed and wireless services.
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