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Puzzle of UAE firm in Sh6b Telkom deal deepens

Financial Standard

By Frankline Sunday | Mar 04, 2025

**Telkom Plaza Head Office on Ralph Bunche Road.**[Wilberforce Okwiri,standard]

In October 2023, the Cabinet rescinded a decision to buy back the majority shareholding in Telkom Kenya from Jamhuri Holdings Ltd, a subsidiary of London-based private equity firm Helios Investment Partners.

This followed a joint parliamentary inquiry that found the government’s Sh6 billion buyout of Helios, conducted a few days before the 2022 General Elections, was unprocedural.

The transaction did not receive the authorisation of Telkom Kenya’s board of directors, the Attorney General, Office of the Controller of Budget, Competition Authority of Kenya (CAK) or Communications Authority of Kenya (CA), as required by law.

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“By dint of this decision by Cabinet, Jamhuri/Helios will refund to the Government of Kenya the amount paid as consideration for the takeover,” stated the Cabinet memo released on October 3, 2023.

The government said it would work with Jamhuri/Helios to transfer their 60 per cent shareholding directly to the Infrastructure Corporation of Africa (ICA) of the United Arab Emirates, the new majority shareholder of Telkom Kenya.

“The offer by ICA includes capital injection to fund Telkom’s critical infrastructure and the overall upgrade of the company’s capabilities, and also settle some of the outstanding liabilities of the company,” said the then-National Treasury Cabinet Secretary Njuguna Ndung’u in a memo.

One and a half years down the line, the new deal appears to have run into fresh headwinds, raising concern that yet another convoluted scheme is unfolding at one of Kenya’s most strategic state corporations at the expense of taxpayers.

According to people familiar with the matter, part of the current stalemate is attributed to a lack of clarity over the Sh6 billion refund and the amounts owed by the various parties involved in the botched August 2022 Jamhuri/Helios transaction.

In the 2022 buyback deal, Jamhuri Holdings Ltd (JHL) sold its 60 per cent stake to the Kenyan government at a nominal 1$ (Sh129 at the current exchange rate).

The government further acquired JHL’s shareholder loan of $51.1 million (Sh6.6 billion), the money at the heart of the controversy. Over a week between July 25th and August 1st 2022, a few days before Kenya’s General Elections, the National Treasury used Article 223 to withdraw Sh6 billion from the Exchequer and paid it into Jamhuri Holdings Ltd’s bank account in Mauritius

The payout included $3 million (Sh330 million) paid out to investment banker John Ngumi, acting as an advisor to JHL; $1 million (Sh130 million) to an unnamed international investment bank, acting as a transaction advisor; and another $1.3 million (Sh 169 million) paid to 15 senior executives of Telkom Kenya under a management incentive scheme programme.

Other payments included $2.6 million (Sh 340 million) received by Adili Trustees Ltd, acting as trustees for the Telkom Kenya Management Incentive Plan, and $422,991 (Sh54.1 million) to the law firm ALN Kenya Anjarwalla & Khanna as payment for legal fees and for acting as an escrow agent. Rescinding the transaction, which at the time had not been concluded, raised several questions that have stood in the way of ICA assuming its majority shareholder position at Telkom Kenya. In the first place, it remains unclear whether Helios Investment Partners is expected to refund the entirety of the Sh6.6 billion in taxpayer funds received from the government of Kenya or the $1 nominal fee.

The lack of clarity around the proposed new majority shareholder has further deepened with scanty information on ICA, prompting suspicion that it is a briefcase company linked to influential politicians in Kenya. On its website, ICA says it invests in digital infrastructure in Africa and is headquartered in the United Arab Emirates with offices in Stockholm, Sweden and Mumbai, India.

The website indicates it was registered in September 2023, a few days before Cabinet’s announcement on the rescinded Helios buyout, and the contact details of the owner of the domain have been redacted for privacy.

According to people familiar with the matter, a team from ICA were in the country late last year to embark on their due diligence of Telkom Kenya but left without making much headway.

There are also reports that the ICA and some officials at the National Treasury are actively engaged in discussions to facilitate the firm’s acquisition of its majority stake.

However, the discussions are reportedly overshadowed by the rescinded Helios buyout, with ICA seeking clarity and more assurances from the Kenyan government.

Of concern is the company’s significant market share in the country’s fibre optic infrastructure and concerns that handing over such access to an unknown foreign entity could expose the country to a significant cyber-security risk.

Telkom Kenya’s digital infrastructure holdings include a 22.5 per cent stake in The East African Marine System (TEAMS), a 5,000km undersea fibre optic cable through Fujairah, UAE. Telkom Kenya also owns a 10 per cent stake in the Lower Indian Ocean Network II (LIONII), a 2,700km undersea fibre optic cable through Mauritius.

The firm also owns a stake in the Eastern Africa Submarine Cable System (EASSy), a 10,000km cable from Mtunzini, South Africa, to Djibouti.

Additionally, Telkom is the landing partner for the LIONII, EASSy, the Djibouti Africa Regional Express 1 (DARE 1) a 4,854km cable from Djibouti to Mombasa, and most recently, the Pakistan and East Africa Connecting Europe Cable (The PEACE Cable), a 15,000km cable from Marseilles, France through to Singapore and South Africa.

This makes the State-run telecommunications firm a strategic asset critical to safeguarding Kenya’s economic and security interests.

Financial Standard reached out to Helios Investment Partners, seeking to establish the particulars of the refund and whether the private equity fund had complied with the Cabinet directive.

“Thank you again for your email, but this is not something that Helios Investment Partners will be commenting on,” stated Isobel Cullinan, a senior consultant at Helios. Financial Standard also reached out to the National Treasury, seeking clarity over the refund and whether ICA had been onboarded as the new majority shareholder in Telkom Kenya.

“I am not aware of that, and it is something that I will have to follow up before I can speak about it,” said National Treasury Cabinet Secretary John Mbadi.

We had not received a response from ICA on the matter by the time of going to press.

Financial Standard also reached out to CAK and CA to establish whether the key regulators were involved in the abrupt change of shareholding at Telkom Kenya.

“The Competition Authority of Kenya has not received a formal merger notification in relation to Telkom Kenya. Should we receive such a notification, it will undergo the requisite review process in line with the Competition Act, Cap 504,” said the competition watchdog in a statement.

CA, however, had not responded to our query by the time of going to press.