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General

France Telecom threatens to pull out of Telkom Kenya

Tuesday 13 April 2010 | 10:53 CET | News
France Telecom and the Kenyan government have ended the first phase of negotiations concerning the French group's USD 385 million claim over Telkom Kenya, Kenya's Daily Nation reported. France Telecom is threatening to pull out of the company, in which it has a 51 percent stake, if problems are not addressed soon, sources familiar to the negotiations said. France Telecom said it was not able to trace some assets that were on the books of Telkom Kenya when the French company bought its stake from the government in 2007. Sources told the EastAfrican daily that in addition to the original USD 385 million claim, an additional claim of USD 300 million has been lodged to fund a five-year business plan. This is based on the grounds that a multimillion shilling supplier contract that Telkom Kenya's management signed with Rapid Communications was concluded just weeks before the French took over, denying France Telecom a chance to negotiate a deal under whose terms it would inherit future debt. Kenya's position in the negotiations is that France Telecom was given ample time and opportunity to conduct due diligence before committing to buy Telkom Kenya. Kenya's parliament had allowed the government to absorb nearly USD 1 billion worth of Telkom Kenya debts to ready it for sale to the private sector. In what now appears as an admission that France Telecom is unable to turn around Orange Kenya in the face of Safaricom's market dominance, the company is calculating that it will need a capital injection of over USD 266 million in the next three years to expand and improve its network. The government still owns 49 percent of Orange Kenya.


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Categories: General
Companies: France Telecom / Orange Kenya / Safaricom
Countries: France / Kenya
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