Telkom's sale: good business?

51% of Telkom Kenya was sold to France Telecom and Alcazar (owned by Agility) for Ksh26bn.
Before that, its 60% stake in Safaricom was exchanged for Ksh69bn debt (made up of Ksh36.3bn to KRA; Ksh10bn to its pension fund and Ksh5.8bn for a syndicated loan and the rest?). My only reservation on the price would be the stake that FT has been given. This now means that all telecom industry is majority owned by foreigners.

However, one must look beyond the price and ask what TK and France Telecom will out of the deal.
TK gets:

• An experienced acquirer: FT has owns Orange, UK 2nd largest mobile operator and also has businesses in Poland, Holland and North Africa. Its had its share of faux pas though.
  
• Capital: With many projects under way in mobile telephony, landlines, internet et al, TK will need a huge infusion of capital to grow
• Experienced Telecoms company: With advanced logistics and technical know-how. FT is the number one broadband Internet provider in Europe and 2nd in the mobile sector after Vodafone

France Telkom gets:

1. A perenial loss-making business with stagnant customer numbers
2. Access to the high-growth Kenyan mobile sector
   
3. Gets in just before fibre-optic cable is about to land on our shores
4. Crucially, the TK has a unified licence (mobile, fixed and internet businesses)
5. TK's data bandwith that can usefully be applied in flowing TV and internet content to homes.

Is Safaricom OFSD being undervalued? So far, the 25% OFSD is expected to bring Ksh40bn thus valuing Safcom at around Ksh160bn. With Ksh17bn profits i.e. a proxy P/E of under 10 (average NSE P/E is 20+), I think we should be looking to raise Ksh60bn+ from the stake.

2007 UPCOMING GREAT INVESTMENT OPPORTUNITIES

Kenya RE IPO
Dyer and Blair is the Lead Transaction advisor in the privatization of the Kenya RE Corporation. The Government of Kenya owns 100% of Kenya Re and intends to sell 40% of its shares. Kenya RE is undergoing a re-organization to reduce costs, improve processes and diversify its income stream. It made a profit of Kes: 461M in 2005 as compared to Kes: 452M previously. The IPO is slated for March 2007.

SAFARICOM: Kenya's most Profitable Company.
Having made a profit of over Sh. 12 billion last year, Safaricom is one of the fastest growing companies in Kenya and it’s riding higher. Safaricom valued at over Kshs: 200 Billion will offload at least 25% of its shareholding probably mid 2007.

Telcom Kenya
The government intend to sell about 34 per cent of its shares through an IPO around Sept 2007.


East African Portland Cement:
Lafarge and the Government to offload more shares to the public to reduce their holdings, and increase the total number of shares traded to the 25% required by CMA for listed companies.Lafarge holds 41.7% in EA Portland and 73% in Bamburi Cement. likely IPO is about end of the year.

Kengen:
The government plans to offload a further 19% to the public in June 2007. Around 400 Million shares reducing its stake to 51%.

FAMILY FINANCE BUILDING SOCIETY (BANK)
Soon to be Family Bank is one of the leading microfinance institutions in Kenya and is now offering 15,000,000 Million Share at Kes:60.00 per share (minimum of 500 shares). The share offer is by private placement and a subsequently IPO or like EQUITY BANK did. One need to be an account holder with family finance to be able to purchase the shares.

SAROVA GROUP
Owns a portifolio of profit making hotels chain in Eastern Africa.

Co-op Bank
Already selling their shares through private placement @100 per share
Profit making and available in many parts of the country.

(Other romoured IPO's include):

Sadolin paint-

Adopt-a-light-biggest outdoor advertiser in kenya, involved in road signing too.

Orion EA-sells agricultral chemicals in East Africa.

Triple A Capital-

More information will be provided about the above.