The Kenyan government has approved restructuring of the state-run telecommunication giant, Telkom Kenya, whereby the company will sell 9 percent of its shareholding to the British phone company Vodafone to finance the restructuring program, Kenyan President Mwai Kibaki said Tuesday.
Telkom Kenya owns majority stake in the profitable Safaricom, a mobile phone service provider that has grown to become one of the most profitable companies in the east African region.
Vodafone hold 40 percent stake in Safaricom while Telkom Kenya, owns majority stake of 60 percent. But a joint contract signed by both parties obliges either part to sell at the most 9 percent to the other party.
At the same time, the President directed that the process be expedited for Kenyans to buy at least 34 percent of the company's share through the Nairobi Stock Exchange.
"We are also looking for a strategic partner to take up to 26 percent of the company's shares," Kibaki said in a speech when he officially opened the Information Communication Technology Strategy Conference in Nairobi.
The move is aimed at bringing back Telkom Kenya to efficiency and getting rid of the company's huge debt portfolio, said Kibaki.
The World Bank and the International Monetary Fund say the inability of Telkom Kenya to improve on service provision would be greatly enhance if it were privatized, helping to cut down on the cost of doing business in Kenya.
Investors have been complaining that the cost of running international businesses in Kenya is made worse by the high cost of telecommunication due to Telkom Kenya's inability.