Telkom Kenya is set to face stiff penalties from the Communications Commission of Kenya (CCK) after claims that the regulator was not made aware of the recent 19% dilution of the government’s stake in the telco. According to HumanIPO, the Privatisation Commission – which is mandated to formulate, manage and implement privatisation processes – complained that the transaction took place behind its back. Further, the watchdog said that it had only learned about the change in Telkom’s shareholding structure through the media. Another bone of contention is the fact that the government ceded a 19% stake in Telkom Kenya to the Orange Group (formerly France Telecom) without the French-owned company paying any money in tax to the Treasury.
As previously reported by TeleGeography’s CommsUpdate, on 30 June the Kenyan government’s shareholding in Telkom Kenya dropped to 30% on a permanent basis following the decision by the National Treasury not to allocate any money to the ailing firm. The Treasury’s stake in Telkom initially dropped to 30% in December 2012 after the government only paid up KES2.5 billion (USD28.7 million) of the KES4.9 billion it was expected to inject into the firm to preserve its shareholding.