Telkom to set up two subsidiaries for digital, finance

Telkom CEO Mugo Kibati. FILE PHOTO | NMG

Telkom Kenya is set to create two wholly-owned subsidiaries to house its digital and financial services businesses as it continues its structural reorganisation journey.

The firm Thursday said the move is meant to help it address digital transformation needs and enhance service delivery.

“At this point and to enhance service delivery, Telkom is creating two 100 percent wholly-owned subsidiaries to house its digital and financial services businesses. The consumer service delivery unit will remain within Telkom,” said a statement from the company.

The telco said the structural changes would not result in any job losses. Telkom began the changes with an announcement in August last year, stating that it was laying groundwork to strengthen its goal of becoming a strong technology firm.

digital divide

“We committed to better positioning of our infrastructure asset base and services to drive digital transformation within the consumer, SME, corporate and public sectors; creating a smart landing hub for submarine cables that would act as the gateway to the East African region and beyond and bridging the consumer digital divide through the expansion of our 4G/LTE network,” the firm said.

The company started by reorganising its structure into Telkom Consumer and Telkom Digital to better customer experience. It now says it’s moving to better cater for the evolving trends in the telco industry, with a heightened demand for infrastructure and data services.

Restructuring of the company’s business comes a year after talks to merge with competitor, Airtel Kenya Limited, collapsed, after Parliament reportedly warned the National Treasury against approving the deal.

On February 8, 2019, the pair had jointly announced the signing of an agreement that would see shareholders of both firms merge their respective Mobile, Enterprise and Carrier Services businesses in Kenya.

They would then operate under a joint venture company that was named Airtel-Telkom where Telkom would have the option of holding up to 49 per cent stake.

The Communications Authority of Kenya had already approved the deal before refusal to approve by Treasury frustrated Airtel to the point of calling off negotiations in August last year.

ownership challenges

Telkom has also been facing ownership challenges over time since the government started reducing its stake, ending with a 40 percent share, while 60 percent is held by British private equity firm, Helios Investment partners.

The firm owns it through Jamhuri Holdings, a firm ICT Cabinet Secretary Joe Mucheru told Parliament in 2019 that he did not know who its owners were.