Summary
- The telecommunications firm has hired property dealing firm, Axis Real Estate, to dispose of the prime assets sitting on about 17.8 acres of land.
- Telkom said Wednesday it has requested its shareholders’ approval to raise the cash -- including through sale of its prime property -- to meet its part of the merger deal.
Telkom Kenya has put on sale Sh3.87 billion properties spread
across the country as it seeks to raise cash for contribution to its
upcoming merger with Airtel.
The telecommunications
firm has hired property dealing firm, Axis Real Estate, to dispose of
the prime assets sitting on about 17.8 acres of land.
Telkom
said Wednesday it has requested its shareholders’ approval to raise the
cash -- including through sale of its prime property -- to meet its
part of the merger deal.
“Under the transaction, Telkom
is required to contribute funds in cash to the combined entity. Both
entities in the transaction will contribute cash, for purposes of the
transition and the integration of systems and network elements,” Telkom
said in a response to Business Daily queries.
The
telco did not disclose the amount it is required to contribute, but
said it has put all the 32 properties on sale to ensure it raises the
money on time.
The property disposal is intended to preclude the option of a bank loan to fund the merger.
“The
intention will be to market a list of properties, with the prospect of
selling a number that will enable the business raise just the amount of
funds required,” said Telkom.
Out of the 32 properties
on sale, only six are empty plots while the rest are developed as
commercial buildings and telephone exchanges.
Biggest property owner
Telkom
Kenya, which is 40 percent owned by the Treasury and 60 percent
controlled by private equity group Helios, is one of Kenya’s biggest
property owners given its legacy as a State corporation.
Three
of the properties, in Ruaraka, Muthangari and Lang’ata, are freehold
while the rest are leases from the government and counties but owned by
Telkom.
The leasehold properties include those in
Bungoma, Embu, Kirinyaga, Kiambu, Kisii, Meru, Murang’a and Kajiado
counties while in Mombasa the Makupa Exchange’s lease is held by
Yusufali Jiwaji.
On February 8, 2019 Telkom and Airtel
announced the signing of a binding agreement to merge their respective
mobile, enterprise and carrier services businesses in Kenya into Airtel
(to be renamed Airtel-Telkom).
Both companies have been
disposing of assets in recent years to keep their businesses afloat, as
stiff competition from market leader Safaricom has kept them
unprofitable.
Last year, Telkom Kenya sold its 723
masts for Sh17.16 billion to American Tower Company (ATC), according to
fillings at the US Securities and Exchange Commission.
Airtel on the other hand sold 1,100 mobile telephone masts to a UK infrastructure firm for Sh19.5 billion in 2014.
In 2017, Bharti Airtel exited the tower business altogether, divesting from its telecom tower company, Bharti Infratel.
The sale of land and offices comes days after liability claims were made against the two telcos by their former workers.
The merger has been dogged by claims from the former employees amounting to Sh8.2 billion.
Sh1 billion claim
Fifty
two former Airtel employees wrote to the Communications Authority of
Kenya (CA) seeking to stop the merger over a Sh1 billion claim against
the firm.
They say the merger will make it difficult
for them to recover the Sh1 billion should they win the labour dispute
in which they claim they were wrongly sacked in January 2016.
Telkom
Kenya, which retrenched more than 2,600 employees, may also be forced
to meet dues claimed by the employees in a Sh7.2 billion case that the
former employees won in 2017.
A four-member tribunal
had established that Trustees of Teleposta Pensions Scheme and Provident
Fund had underpaid the 948 retrenched Telkom Kenya workers’ pensions.
Telkom
also announced a new round of retrenchment to pave way for the merger,
axing 575 workers who have been declared redundant.
The
company issued a one-month notice of redundancy, with effect from July
31, 2019, to its employees, informing them of the intention to terminate
their employment as a result of the impending transaction.
“This
is in line with the law and is a process that has to be undertaken
before employees are able to move to any other entity and is still
subject to regulatory approvals,” the firm said in a notice to the
press.
Advertise and interview
It
said that subsequently, the intention is to advertise and interview
Telkom employees for positions in the Combined Entity and its outsourced
partners.
“Engagement of these employees will be
guided by the Combined Entity’s recruitment criteria as well as the
mapped positions therein,” said Telkom.
Airtel-Telkom,
the merged entity, is set to command 34 percent of the market share in
an attempt to challenge Safaricom’s dominance.
Telkom
has been losing market share, according to CA data. The telco lost
400,000 subscribers in the three months between January and March this
year.
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