Kenya to sell shares in Telkom Kenya, Safaricom
Tue Feb 28, 2006 12:59 PM GMT13

NAIROBI (Reuters) - Kenya will offer 60 percent of its shareholding in
fixed-line monopoly Telkom Kenya on the stock exchange and to a
strategic investor after it restructures the loss-making company,
President Mwai Kibaki said on Tuesday.

"The government is going to sell 34 percent of the company shares on
the Nairobi Stock Exchange," Kibaki told an information technology
conference. "We are also looking for a strategic partner to take up to
26 percent of the company's shares."

Information and Communication minister Mutahi Kagwe told reporters
that the government would sell 9 percent of its share in leading
mobile firm Safaricom to Britain's Vodafone to finance the
restructuring of Telkom Kenya.

Telkom Kenya owns 60 percent of shares in Safaricom, which it jointly
owns with Vodafone.

Vodafone had offered to purchase an 11 percent stake in Safaricom from
Telkom at $100 million but government sources said Kenya had baulked
at the prospects of giving the British company control of the mobile
operator.

Based on a consultant's reports, the cost of restructuring Telkom
Kenya and buying out around 12,000 of its 18,000 employees would range
from $154 million to $300 million.

The restructuring is deemed as an essential step to be taken before
Telkom's privatisation can go ahead as donors have insisted.

Kenyan businesses have long complained that poor telephone services
due largely to Telkom's inefficiencies add a huge cost to doing
business in the country, east Africa's biggest economy.

KEY REFORMS

But the government said it had embraced key reforms to boost
efficiency in the industry.

"In order to encourage more investments in the sector, the government
has fully liberalised the sector through opening up of the
international gateways to other players and licensing of new operators
to compete with Telkom Kenya," Kibaki said.

He said the number of mobile telephone lines had increased to 5.5
million lines from 150,000 in 2000. Kibaki said the government would
spend $30 million to roll out broadband wireless in rural areas.

The government has issued eight licences to Internet backbone gateway
operators, 15 local loop operators and eight public data network
operators, Kibaki said.

"I have directed that additional licences for national telephone
operators to be auctioned," he said.



Benjamin Makai
Tel: 254-722-540641
P.O. Box 8608, 00300, Nairobi, Kenya

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