By BUSINESS DAILY

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A United Arab Emirates-based firm will take up a majority stake in Telkom Kenya from London’s Helios Investment Partners, marking the latest twist in the deal room of the loss-making telco.

Kenya’s Treasury said on Wednesday it had settled on Infrastructure Corporation of Africa LLC (ICA) as the new majority shareholder in Telkom Kenya following a competitive process that started in January 2023.

This came hours after the Cabinet rescinded a decision in July last year that saw Helios pay Ksh6.09 billion ($41 million) to the government to exit the telco.

The Treasury withdrew the amount on August 5, 2022, and paid Jamhuri Holdings Ltd, a Mauritius-based subsidiary of Helios, in a transaction that did not get parliamentary approval.

The latest development means Helios will have to refund the Kenyan government the $41 million and then directly sell its 60 percent stake to the UAE firm, allowing Kenya to avoid the technicalities of selling Telkom as a parastatal.

Read: How Telkom Kenya feud with US firm led to mast shutdown

“Government of Kenya (GoK) will work with Jamhuri/Helios to transfer their 60 percent shareholding directly to ICA. This process will inevitably require rescinding of the transaction documents already signed between GoK and Jamhuri/Helios, among other necessary actions,” said Njuguna Ndung’u, the Treasury Cabinet Secretary.

The Treasury said the UAE firm will inject capital into Telkom to fund critical infrastructure and upgrades and also settle some of the outstanding liabilities.

The government will also inject funds into the telco as part of its obligations as a minority shareholder and a key consumer of services.

“GoK as a critical stakeholder will pursue the actualisation of regulatory reforms that are necessary to correct the structural imbalance in the telecommunications industry for the benefit of all stakeholders, key of whom is the public as a consumer,” said the Treasury.

The disclosures eased concerns over the structure in which Helios would have refunded the cash without resuming its position as Telkom Kenya’s majority shareholder just a year after exiting due to dissatisfaction with some State actions.

Read: Govt, Helios scale down investment in Telkom Kenya

The exit deal saw the government pay the PE fund a peppercorn amount of $1 as consideration for the deal, while another $51 million was reimbursement of shareholder loans that the fund had provided. The cash was to be raised via issuance of a three-year Treasury bond.

The UK-based fund also forwent $239 million it inherited from Orange in 2016 when it bought a 70 percent stake from the French telecoms operator.

Treasury said its decision to buy back the stake was partly driven by a National Security Council approval on grounds of risk to national security.

Telkom Kenya provides critical government communications services to key government institutions like the Office of the President, State House, Department of Defence and the government data centre.