The administration of the loss making company, Telkom Kenya, had asked for more than Sh13 billion from shareholders which is the Kenyan government and France Telecom, although it settled for Sh10 billion instead.
The government of Kenya was to inject KSH 2.4 Billion into Telkom Kenya in so that it could increase its stake back to 40 percent but the government failed to meet the deadline. Now Orange will retain its current 70 percent stake in the company.
“I confirm to you that there will be no negotiations. The capital structure will remain unchanged at 70:30,” said Olivier Emberger, a press officer at France Telecom.
Now, the Kenyan landline phone service provider, Telkom has reported a loss of KSH 7.9 Billion in 2012 and is struggling to roll settle debts, many of which now come with a maximum time line of just 90 days as creditors worry that the company could be forced into bankruptcy.
“Our voting rights in Telkom Kenya will be weakened, but we are working on whether it’s prudent to inject more cash in the firm to return our stake to 49%”, government finance minister Njeru Githae revealed.
The Treasury is weighing the opportunity cost of keeping the government’s shareholding in the company at 40%. “If we find that the effect is small or zero we will be comfortable with lower a stake”, added Githae.
France Telecom remunerated USD390 million in late 2007 for its 51 percent stake in the company. Its stake was increased last December when the French company injected more capital into the firm.