Trouble in Paradise, I hear! Telkom isn’t able to pay its debts and it's losing internet connectivity around Kenya. What's really going wrong with the Telecommunication Giant?! Here I’ll take you through the current situation in Telkom and why they are struggling.
According to an article from kbc.co.ke requesting the government to bail out Telkom, COWU Secretary General Benson Okwaro stated that the Telco is currently swimming in debt and could possibly force a possible shutdown and cause its labourers to lose their jobs.
He said that American Towers Corporation (ATC) had cut off half of its nationwide masts due to an unpaid Ksh 200 million bill, putting the company in danger of going out of business and making it difficult for subscribers in the affected areas to make calls, use the internet, and send money.
In 2013, Telkom sold 723 base stations to ATC on a sale and leaseback agreement to cut on operation costs. To get the company back on its knees, Okwaro asked the government to bail it out with Ksh 6 billion and look for ways of making the company profitable.
Helios had a Ksh 6 billion investment which they took after the government bought their 60 per cent stake. Therefore, a similar investment must be done to revive the company,” he said. Besides the investment, the government, he added, must pay Telkom a pending bill of Ksh 2 billion which has accumulated over the years to enable the company to offset operation costs.
“They offer services, but the government is not paying. It is therefore not possible to expect the company to make profits,” he said.
In another article from techweez.com, the KSH 7.2 billion in current debt owed by Telkom is being taken on by a strategic partner that the government is seeking. The action is intended to save the struggling telco. Additionally, the government views the action as crucial to lowering the risk of snooping on important government data. The military and other government organisations use Telkom's network infrastructure.
An alternative would be for the government to use public monies to bail out Telkom through the National Treasury. Information, Communication, and the Digital Economy Cabinet Secretary Eliud Owalo told parliament: “We are in a situation where Telkom is unable to pay. We are exploring ways and means of getting support and intervention from the National Treasury if any”.