[kictanet] Fate of NOFBI - Investors attracted by Telkom Kenya’s Sh13bn real estate

[Mwendwa Kivuva]

As Telkom Kenya through Orange auction off public resources, can we have
NOFBI moved from the control of this dinosaur? A lot of taxpayers money has
gone into roll-out of NOFBI in the recent past. NOFBI has also been
identified as a driver for Vision 2030 in the ICT masterplan.

http://www.businessdailyafrica.com/Corporate-News/Investors-attracted-by-Telkom-Kenya-real-estate/-/539550/2889436/-/20jgv9/-/index.html

Local and foreign firms fighting to take over French firm Orange’s stake in
Telkom Kenya are mainly eyeing the company’s Sh13 billion real estate
assets, a valuation report shows.

Private equity firm Helios and UK’s British Telecom make the list of
investors who have recently expressed interest
<http://www.businessdailyafrica.com/Corporate-News/Helios-offers-to-buy-French-firm-stake-in-Telkom-Kenya/-/539550/2853620/-/bd661y/-/index.html>
 in buying Orange’s 70 per cent stake in the Kenyan telecoms operator.The
report, which Orange prepared ahead of failed negotiations to sell the
stake to Nigerian investors, shows that land, together with frequency
spectrums and a vast fibre optic cables network, top the list of assets
that the French firm is using to entice suitors as it prepares to exit the
Kenyan market.

The Treasury, which owns a minority 30 per cent of Telkom on behalf of the
public and will be co-owner with the new shareholders, has been actively
involved in the negotiations.

Telkom’s vast real estate wealth has never been made public and the
valuation, which was done nearly two years ago, shows that the firm has 335
properties priced at Sh9.4 billion.

The majority of the pieces of land have buildings that host telephone
switches, repeaters or microwaves.

The Investors Information report separately lists Telkom as owning 39.1
hectares of land and real estate properties along Nairobi’s Ngong Road with
11 residential buildings, a sports club and offices all valued at
approximately Sh4 billion.

Telkom owns 23 per cent stake in TEAMs, a 5,000-kilometre undersea fibre
optic cable that links Kenya to the global internet superhighway through
Fujairah in the UAE.

The company, which was sold to French firm Orange in 2007 at Sh27 billion,
also has a 10 per cent stake in another undersea optic cable, LION2, a
2,700-kilometre cable that connects Kenya to the global network through
Mayotte in Mauritius, and an eight per cent stake in the East Africa
Submarine System cable.

Telkom operates 3G, CDMA, GSM and Wimax frequencies that are critical to
the rollout of the increasingly important data services as the voice market
continues to shrink.

People familiar with the ongoing buyout talks said that while real estate
properties and the frequencies have become key selling points for Telkom,
potential buyers have been going deeper and scrutinising how much of the
assets are not tied to the company’s heavy debt load. There has also been
interest in the technology Telkom is running.

“Telkom Kenya has a rich mix of frequency spectrums and assets portfolio
that would attract any potential investor but sound investment decision
goes beyond these,” our source said, adding that potential investors are
looking at things such as the number of active sites the company has,
revenue streams, and control of revenue leakages such as fraud on fixed
lines.

Curiously, the investor report does not include Telkom’s debt but other
reports have shown that by August 31, 2014, its debt to equity ratio stood
at 16 – a figure that is way above the statutory limits.

To compound matters, the two shareholders are yet to agree on how to handle
a Sh1.2 billion award that the High Court gave former employees who were
retrenched in 2006.

Telkom also manages the National Optic Fibre Backbone (Nofbi), an inland
fibre optic cable network that runs across the district/county on behalf of
the government.
______________________
Mwendwa Kivuva, Nairobi, Kenya

"There are some men who lift the age they inhabit, till all men walk on
higher ground in that lifetime." - Maxwell Anderson
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