UAE firm to Acquire Majority Stake in Telkom Kenya as Nationalization Deal with Helios Is Revoked

The Infrastructure Corporation of Africa LLC (ICA), based in the United Arab Emirates, is set to acquire a 60% stake in Telkom Kenya from the London-based private equity firm Helios. This transaction follows a competitive process and was confirmed by Kenya’s finance ministry.

In a significant development, the Kenyan cabinet recently revoked a previous administration’s deal with Helios for the nationalization of Telkom Kenya. The decision cited “governance challenges” in the previous transaction.

This change may introduce an element of uncertainty for foreign investors, as such abrupt policy shifts, including the cancellation of established agreements, are typically viewed unfavorably when a new government assumes power, according to legal experts based in Nairobi.

The finance ministry clarified that it had opted to abandon the nationalization of the company and had initiated a search for a new strategic investor in January of this year. After the evaluation process, ICA emerged as the chosen investor.

The ministry stated, “The offer by ICA includes capital injection to fund Telkom’s critical infrastructure and the overall upgrade of the company’s capabilities, and also settle some of the outstanding liabilities of the company.”

Under the new arrangement, Helios will transfer the majority stake to ICA, with financial details of the deal with the UAE company remaining undisclosed.

As of now, Helios, which had acquired the 60% stake from Orange in 2016, has not publicly commented on the government’s decision to rescind the previous agreement.

In addition to retaining a 40% shareholding, the government intends to lead regulatory reforms aimed at addressing imbalances in the telecommunications industry, as announced by the Treasury.

Telkom, while the smallest operator compared to Safaricom and Bharti Airtel, manages key assets critical for government communications, including a national fiber-optic network. Its management has long advocated for industry reforms to curb the dominance of Safaricom, which commands a significant share of revenue and users in the telecommunications sector.