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Monday, 26 November, 2001, 16:11 GMT
Kenya still committed to Telkom sale
Nairobi skyline
Many see privatisation progress as a test of Kenya's commitment to economic reform
By BBC World Business Report's Duncan Bartlett

Kenya remains committed to the privatisation of its state-run telecommunications provider despite the collapse of talks with a key bidder, Kenya's communications minister has said.

The government pulled out of talks to sell Telkom Kenya to a consortium led by Econet Wireless of Zimbabwe last week.

The delay in the sale, which was first planned for April last year, was one of the reasons behind the decision of the International Monetary Fund to suspend lending to the country.

The success or failure of the privatisation programme is seen by many as the ultimate test of the country's commitment to economic reform.

'Jewel in the crown'

Telkom Kenya is often referred to as the jewel in the crown among the country's state-owned industries.

The scheme was to have been the country's biggest privatisation to date.

Kenya's communications minister, Musalia Mudavadi, admits the prospects of the Telkom Kenya privatisation happening in the near future aren't good.

The Econet-led Mount Kenya consortium bid $325m for Telkom Kenya, but was insisting on a condition of full management control.

The Kenyan government claims the bid failed to live up to expectations, but hasn't given further details.

Long-running saga

The uncertainty surrounding the affair has done little for general confidence in the Nairobi stock market.

The collapse of talks with Econet was the latest in a series of setbacks.

Ministers rejected Mount Kenya's initial $305m bid in favour of talks with the second-highest bidder, Orascom Telecom of Egypt.

When these negotiations failed, Mount Kenya returned to the table with its latest doomed bid.

See also:

22 Aug 01 | Business
African telecoms sales on hold
22 Nov 01 | Business
South Africa buys back flag carrier
15 Aug 01 | Business
Trouble ahead for Kenya's economy
07 Aug 01 | Country profiles
Country profile: Kenya
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