McCauley Wycliff
Member
The High Court has cleared Telkom Kenya and Airtel to revive their planned merger. The High Court quashed a letter by the anti-graft agency questioning the sale of Telkom’s properties during the privatization period.
This decision paves the way for the merger which, according to Telkom, stalled because of the EACC investigations. The stalling increased the risk of of Airtel walking away from the negotiation table.
High Court Judge Jairus Ngaa said in his judgement that the move by the EACC to recover property already sold or to stop those on sale was illegal.
“It follows that to the extent that the respondent purported or attempted to recover public property or prohibit its sale through a letter, its decision is ultra vires. In the language of judicial review, its decision can be said to be unlawful because it is tainted by all or either of the grounds of illegality, irrationality and procedural impropriety,” the judge said.
In a gazette notice last month, EACC said that investigations established that the process of privatization of Telkom Kenya was above board and that there was non evidence of impropriety or culpability of the public officials involved in the process. EACC, however, stated that it was awaiting a response from the Director of Public Prosecution(DPP)
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Before the halting of the merger plan Telkom had scaled down operations. This saw it lose 0.4% of its market share between December 2019 and March 2020.
In April of 2020 the communications Authority quarterly report indicated that Telkom had shut down nearly 90% of its mobile money agent network.
Plans to privatise Telkom started in 2007 when the government disposed of 51 per cent of its shares to Orange E.A. Limited, whose shares were in turn owned by France Telcom.
In 2012, the company recorded an unsatisfactory and impaired financial position and was faced with imminent insolvency. And to avert the situation, the two shareholders resolved to restructure the applicant’s balance sheet.
The exercise involved, among other things, writing off part of the company’s debt, injection of capital by the two shareholders and, adjustment of the government shares to 30 per cent and France telecom shares to 70 per cent on account of each shareholder’s contribution