Kenyan Government Declines to Support Struggling Telkom
Published on: 20th Jun 2013
By: Ian Mansfield
The Kenyan government has decided not to participate in a rights issue by the financially struggling Telkom Kenya and will retain its stake at 30 percent in the company.
The management of the loss making company had asked for more than Sh13 billion from shareholders -- the Kenyan government and France Telecom.
If the Kenyan government had participated, then its shareholding would have risen to 40 percent, but it was reportedly unconvinced that the company can turn around its losses.
The company reported a loss of Sh7.9 billion last year, and is struggling to roll over debts, many of which now come with a maximum duration of just 90 days as creditors worry that the company could be forced into bankruptcy.
"No money has been allocated for Telkom Kenya. But going forward, the Cabinet will consider the matter and make a decision," the economic secretary Geoffrey Mwau told the Business Daily newspaper.
Just a year ago the company was forced into seeking shareholder support although it refuted reports at the time of a financial crisis at the company. The company does not expect to return to profit until at least 2016.
France Telecom paid USD390 million in late 2007 for its 51% stake in the company.
On the web: Business Daily