Helios entry into telecoms sector to take fight for clients a notch higher

Orange Telkom Kenya Chief Executive Officer Vincent Lobry during the unveiling of the dual SIM 3G Firefox OS smartphone on June 24, 2015. Telkom Kenya and Equitel now control 11.9 per cent and 2.9 per cent of overall market share respectively. PHOTO | DIANA NGILA | NATION MEDIA GROUP 

In Summary

• Analysts told the Nation that Equity Group and Wananchi Group could be the new operators of Telkom Kenya since they are conversant with the sector.
• Chief Executive Officer James Mwangi said the bank was following closely the development in anticipation of a “deeper business partnership with Telkom Kenya”. 
• Helios manages approximately Sh300 billion worth of investments and prides in purchasing brands in Kenya, Nigeria and South Africa, creating value in them, before selling. 

By LILIAN OCHIENG
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The telecoms sector is expected to be more aggressive this year as Helios Investment Partners comes in with new strategies for Telkom Kenya challenging an industry dominated by Safaricom.

It is expected that a new operator will be involved in running the firm since Helios’ core mandate is to invest billions and ensure its success by pulling strings from the boardroom.

Analysts told the Nation that Equity Group and Wananchi Group could be the new operators of Telkom Kenya since they are conversant with the sector.

The pair had deals with Helios making it able candidates. 

“Helios has a stake in Wananchi, a position purchased in 2014; we wonder whether the relationship between the two portfolio investments might at some point find synergies,” a market update by Standard Investment Bank said. 

Equity Bank expects to reap bigger from Helios’ entry into telecoms.

Chief Executive Officer James Mwangi said the bank was following closely the development in anticipation of a “deeper business partnership with Telkom Kenya”. 

“We hope to explore a deeper partnership as soon as the deal is complete, we will simply be enhancing an existing relationship,” said Mr Mwangi in a phone interview earlier.

Already, the market structure seems to have changed with the Communications Authority (CA) sector statistics showing an increase in Equitel and Telkom Kenya market share from July to September.

On the contrary, Safaricom and Airtel lost their market share in the same period. 

Telkom Kenya and Equitel now control 11.9 per cent and 2.9 per cent of overall market share respectively.

NOT SO FAST

The market shares of the two operators are expected to increase this year as Telkom Kenya undergoes structural changes. 

Equitel, on the other hand, will be positioning itself to possibly merge its operations with Telkom Kenya through an agreement with Helios. 

Mr Frederick Ogollah a senior lecturer in Strategy and Competitiveness at Strathmore refers to Helios as an opportunist investor that is out to make money and later sell the business. 

“It is not yet time for the National Treasury to celebrate as Helios will only operate within a five to seven year time frame with the intention of making money and quitting,” said Mr Ogollah. 

Helios manages approximately Sh300 billion worth of investments and prides in purchasing brands in Kenya, Nigeria and South Africa, creating value in them, before selling. 

Equity Bank CEO James Mwangi is aiming for the moment that Helios will opt out so that it can fully enter the telecoms market.

The transfer of 70 per cent stake at Telkom Kenya to Helios is yet to be approved by CA and competitions watchdog Competitions Authority of Kenya