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Telkom Kenya In Dire Straits
Rank: Elder Joined: 10/14/2009 Posts: 2,057
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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? If you are an eagle don't hang around with chickens; chickens don't fly....
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Rank: Elder Joined: 9/29/2006 Posts: 2,570
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Is an IPO viable? The opposite of courage is not cowardice, it's conformity.
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Rank: Chief Joined: 8/4/2010 Posts: 8,977
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jerry wrote:Is an IPO viable? How do they place an IPO while they've never returned profits in 3 consecutive years... $15/barrel oil... The commodities lehman moment arrives as well as Sovereign debt volcano!
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Rank: Elder Joined: 4/22/2010 Posts: 11,522 Location: Nairobi
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I usually wonder what is keeping them afloat its evident that its one of the worst run companies,the customer care is just terrible the service is pathetic...its just a matter of time before it goes under.If something is to be done it should be done really fast. possunt quia posse videntur
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Rank: Elder Joined: 9/15/2006 Posts: 3,906
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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.
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Rank: Elder Joined: 12/9/2009 Posts: 6,592 Location: Nairobi
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jerry wrote:Is an IPO viable? Would you buy/participate? There's your answer. BBI will solve it :)
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Rank: Veteran Joined: 4/30/2010 Posts: 1,635
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Rank: Elder Joined: 7/26/2007 Posts: 6,514
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F**k Telkom, let them die! We have subsidised that piece of junk for decades, and even now why should the public inject cash when there are rich shareholders getting paid every year. BTW, my landline hasn't worked in 8 months now, and they keep sending me bills and threats of disconnections! HILARIOUS... Business opportunities are like buses,there's always another one coming
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Rank: Elder Joined: 11/26/2008 Posts: 2,097
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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. "Never regret, if its good, its wonderful. If its bad, its experience."
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Rank: Elder Joined: 10/13/2009 Posts: 1,950 Location: in kenya
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surely this company is a quick sand and the earlier the government realises this the better. How can a company that has a monopoly in fixed lines(almost all Kenyan firms and most individuals boast of having a telkom line) continue making loses when they had most of its balance sheet cleaned. This company is very confused, it doesnt know its strengths. GSM and other wireless technologies are cheap to maintain and efficient but if you have fixed line in almost every middle class home and in all business firms I think its crazy to try to compete with GSM operators. The infrastructure that Telkom has is a waste its interesting to note that Access Kenya control 40% of all corporate IT clients....How can Telkom let this be.This is their niche but they have lost their way tryin to compete in the retail and mass market where the margins are just too low. '......to the acknowledgment of the mystery of God, and of the Father, and of Christ; 3 In whom are hid all the treasures of wisdom and knowledge.' Colossians 2:2-3
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Rank: Elder Joined: 9/25/2009 Posts: 4,534 Location: Windhoek/Nairobbery
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Just bail out the damn thing atleast its providing jobs
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Rank: Chief Joined: 1/13/2011 Posts: 5,964
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MTN's adventure into Nigeria via fixed lines rings a similar bell here. Mad losses.
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Rank: Elder Joined: 11/26/2008 Posts: 2,097
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the deal wrote:Just bail out the damn thing atleast its providing jobs ??? "Never regret, if its good, its wonderful. If its bad, its experience."
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Rank: Member Joined: 1/27/2012 Posts: 851 Location: Nairobi
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KulaRaha wrote:F**k Telkom, let them die!
We have subsidised that piece of junk for decades, and even now why should the public inject cash when there are rich shareholders getting paid every year.
BTW, my landline hasn't worked in 8 months now, and they keep sending me bills and threats of disconnections! HILARIOUS... @KulaRaha, Out of curiosity, why do you keep the line? About Telkom the company,Orange[France] should be let to carry its own cross. If they own what they claim, they must have known that long before they bought it. They also must have gotten reasons, then,as to why such was so. They cannot just come out now that things have gone haywire and starting crying foul. If the business doesn't make sense as a going concern, they should be let to wound up. Winding up being such a tragedy for a company like Telkom,it's upon the current shareholders to shop for a buyer and cut their losses. It won't be right to try steadying this sinking ship. But gov'ts are gov'ts world over.
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Rank: Elder Joined: 7/26/2007 Posts: 6,514
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mkeiy wrote:KulaRaha wrote:F**k Telkom, let them die!
We have subsidised that piece of junk for decades, and even now why should the public inject cash when there are rich shareholders getting paid every year.
BTW, my landline hasn't worked in 8 months now, and they keep sending me bills and threats of disconnections! HILARIOUS... @KulaRaha, Out of curiosity, why do you keep the line? 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! Business opportunities are like buses,there's always another one coming
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Rank: Elder Joined: 7/26/2007 Posts: 6,514
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Tebes wrote:the deal wrote:Just bail out the damn thing atleast its providing jobs ??? 1649 employees. 10B bailout. Cost per employee is KES 6M approx. Hope you get paid more than that! Business opportunities are like buses,there's always another one coming
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Rank: Member Joined: 10/26/2008 Posts: 380
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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.
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Rank: Elder Joined: 9/25/2009 Posts: 4,534 Location: Windhoek/Nairobbery
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KulaRaha wrote:Tebes wrote:the deal wrote:Just bail out the damn thing atleast its providing jobs ??? 1649 employees. 10B bailout. Cost per employee is KES 6M approx. Hope you get paid more than that! Bailing it out and putting it on a better business plan means u as a tax payer have a better chance of recovering the billions which have been sunk into the company...letting it sink will be a bigger loss to you as a tax payer...what's the cost of producing one permanent job in Kenya I guess it's beyond 6M.
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Rank: Elder Joined: 7/26/2007 Posts: 6,514
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the deal wrote:KulaRaha wrote:Tebes wrote:the deal wrote:Just bail out the damn thing atleast its providing jobs ??? 1649 employees. 10B bailout. Cost per employee is KES 6M approx. Hope you get paid more than that! Bailing it out and putting it on a better business plan means u as a tax payer have a better chance of recovering the billions which have been sunk into the company...letting it sink will be a bigger loss to you as a tax payer...what's the cost of producing one permanent job in Kenya I guess it's beyond 6M. 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. Business opportunities are like buses,there's always another one coming
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Rank: Chief Joined: 8/4/2010 Posts: 8,977
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And Warren Buffet effortlessly avoids Telcos and airline investments... When the deals go wrong, they become a perpetual sinkhole of good money thrown after bad money or in other terms - bailouts... If orange were let to go bust apart from employees, dealers and orange money, how much would it affect gubberment revenues in terms of taxes? So when are we going to hear the same bailout echos coming from the other telcos esp airtel... I wonder who will be left holding the poop bag when that drama unfolds... $15/barrel oil... The commodities lehman moment arrives as well as Sovereign debt volcano!
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