The story can be found in today's Daily Nation. What caught my eye however is the fact that 'as Telkom has continued to make huge losses......France Telkom have been squeezing interest payments and other fees from the Kenyan Subsidiary that could easily rival profits made by some of the biggest banks in Kenya'

Not really surprising because this is the same thing that happens every time foreigners invest into quasi government bodies - they ensure that they earn their dividends in form of huge management fees irrespective of how the entity is performing. Remember Pan Paper Mills?

It seems what Safaricom accomplished in Kenya is not 'as easy as pie'.

And Michael Joseph learnt it the hard way if I recall correctly. In freezing Hungary, he was working for the 3rd mobile teleco and he had painful memories. Whatever they did, they could not unseat the dominant rival and their business plain struggled. He sure as hell, did not repeat that mistake in Kenya.


Now Telkom Kenya story was shocking to read. I think the answer lies with approaching business as Apple did with Microsoft. Apple by the way was so beaten down in 1999 that they took a loan from their arch enemy and swore never to compete with Microsoft directly again in their dominant PC segment. For their reinaissance, they chose to compete with SONY in personal devices instead.

So Telkom Kenya is the king of data. Why bother with all these Fixed line/voice/SMS/VAS segments? I say they should use them as loss leaders but just make sure any one in Kenya (individual, SME, Corporate, MNO) who needs data personal modem, wireless, leased line, backhaul network uses Orange Telkom.

After retrenching 16,100 kenyans they want the same to bail them out? And also the issue of ownership. Apparently some big people own 10.7% of the company. Who are these? France Telecom discloses that it owns only 40.3 per cent of Telkom Kenya.

Just bail out the damn thing atleast its providing jobs

???

A landline is useful if you are receiving calls from overseas. They can call for cheaper using their calling cards. Rates for mobile are still higher (amazing isn't it?).

However, mine doesn't even have a dialling tone. If they want to disconnect they are free to do so, I will never settle their bill!

This business is not a going concern.

As long as the business does not cover its costs, 5 years down the line - how will a bailout help? Next year, it will also need a bailout. Sometimes its good to know when to throw the towel in!

For management, they are better off trying to reduce their costs. Or generate money in other ways, e.g. sell of some of the non-critical assets - e.g. buildings.

NB: I think FT has less to lose than GoK if the company goes down. Over the 5 years, it must have raked in close to 20bn in interest payments over the "shareholder" loans. I would say their interest in TKL is only as a bank - they are not interested in making the company stay afloat, or making it into a profitable venture. Their investment is not going to pay off even after 5 years - why stay?

The argument of TKL giving jobs - while true, providing jobs comes at a cost. The cost for the shareholder in this case is just too high.

I still wonder why people consider having a fixed line necessary. It all depends on what is hooked up to the PABX. If i was starting an office, it would have wireless modems plugged in to the PABX, rather than the messy service called "fixed line". Also note that Safaricom/Airtel can also provide hosted PABX and E1 solutions - you dont need a fixed line.

When we bailed it out the first time, and the second time, you told me the same thing. It will have a better business plan and I will recover my billions.

Now you want it to be bailed out a third time? In 5 years?

Yes, I believe you today. I also believe in the Seven Dwarves.