Why hasn't the government divested from Safaricom, in that case? You need to delink the argument from the profit motive. If the government has no business doing business (which is a view I strongly hold), then government should relinquish it's shareholding in everything from cement, banking, airline travel, petroleum etc. We should not be saying government has no business doing business only when the companies are making losses... 

I'll explain my view - WPP - the worlds largest advertiser. WPP actually stands for Wire Plastic & Products. Martin Sorell bought it primarily because it's asset base was larger than it's book value (the move allowed the company to buy advertising agencies with the liquidated assets - given that the company was worth less than the assets it was also easy to fundraise)- which I suspect is the case with Telkom Kenya. This move that Orange is pulling, I suspect capitalises it long enough to reduce government shareholding (precisely because of citizen pressure with regards to efficient use of taxes). The value keeps dropping with every capital injection (the "crisis") finally allowing Orange to have the entire company (why would Orange keep increasing their shareholding if it's a loss making enterprise without hope? Why would they keep pumping cash into the company if it's derelict?) . This is mere speculation on my part. 

Telkom Kenya initially owned shares in Safaricom - at the time, Safaricom was worth more than Telkom Kenya - a ridiculous situation. A clever investor (had Telkom been a publicly traded company) would simply have bought Telkom to gain a majority share of Safaricom at a bargain... 




On Tue, Jun 4, 2013 at 8:09 PM, Ali Hussein <ali@hussein.me.ke> wrote:
I disagree..there are definitely assets within Telkom Kenya. The question is whether those assets are pertinent to the success of a Telco. Definitely not all of them are.

May be the Government should cut its losses and divest fully from Telkom Kenya. Certainly it doesn't make sense anymore for Governments to own a piece of a Telco. If it wants to continue to maintain its Big Brother role in the name of National Security it doesn't need to own a Telco. Just ask Google and AT&T and other Telcos in the US.    


Ali Hussein
CEO | 3mice interactive media Ltd
Principal | Telemedia Africa Ltd


"The future belongs to him who knows how to wait." - Russian Proverb

Sent from my iPad

On Jun 4, 2013, at 7:04 PM, Barrack Otieno <otieno.barrack@gmail.com> wrote:

You nailed it Phares, exactly!


On Tue, Jun 4, 2013 at 6:47 PM, Phares Kariuki <pkariuki@gmail.com> wrote:
Not so simple… 

Telkom Kenya (at some point between 2006/2007), was East Africa's largest company by assets… 

Even if Orange was shortchanged by 300M USD, there are still significant real estate holdings (all the telephone exchanges - the land they have  etc etc). 

These are assets which were bought with public cash. It's a tricky situation where the government either throws good money after what is potentially a bad investment or the government lets Telkom die (with a significant investment of our tax money)… Simply letting the organization go, might cost the country more in terms of asset loss… 


On Tuesday, June 4, 2013 at 9:54 AM, Adam Nelson wrote:
IMHO, the easy solution is for the government to divest its share and let the market take care of the rest.  Landlines and fixed data connections no longer require government support and if the company fails, it's not a big problem since Telkom is not a critical resource (unlike KPLC).



On Tue, Jun 4, 2013 at 8:57 AM, Barrack Otieno <otieno.barrack@gmail.com> wrote:
Ali,

I think Telkoms problems are deliberate, there is no way such an institution can be crippled without a deliberate move and sheer ignorance this is where we call for accountability, there must be someone smiling somewhere over its misfortunes. Sometimes Business is common sense, you reap what you sow, we need to know who was the sower in this case?, what was sowed and who reaped where because public money was pumped into this organization. We also need to have a public audit of its asset base and what really transpired when the organization was downsizing.

Best Regards


On Tue, Jun 4, 2013 at 8:29 AM, Ali Hussein <ali@hussein.me.ke> wrote:
Listers

The trials and tribulations of Telkom Kenya are a sad chapter in the country's road towards actualization of Vision 2030.

What actually ails Telkom Kenya? 

What is the real reason behind its inability to leverage on its legacy systems to re-invent its business model?

Is one of the problems the fact that the Government shackled it with a nondescript, pedestrian workforce steeped in Moi era  non-performance ethos?  

Are there forces beyond the powers of the Management of Telkom Kenya (like Mpesa maybe?) that has made it so irrelevant in the scheme of things? 

In my humble opinion this has been a failed exercise in privatization. 

What did we do right in the Government divestiture of Safaricom in comparison to Telkom Kenya? 


Ali Hussein
CEO | 3mice interactive media Ltd
Principal | Telemedia Africa Ltd


"The future belongs to him who knows how to wait." - Russian Proverb

Sent from my iPad

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