Telecoms operator Safaricom is considering writing off a 1.5bn debt owed by Telkom Kenya and Airtel. The debt comes from using Safaricom’s infrastructure known as co-location and interconnection fees from cross-network calls.
Safaricom said they have to provision on a conservative basis when there are delays in collecting dues which subsequently increased the firm’s expected loss.
“On expected loss, yes, I think we spoke about this in H1 as well we did see the accumulation of losses from Telkom Kenya, and overall co-location and interconnect all put together is the amount of about 1.5 billion,” Safaricom Chief Finance Officer Dilip Pal stated.
This explains the major chunk of the increase in expected loss compared to last year. Safaricom did not reveal a financial breakdown of how much each of the rivals owes it, and it’s not clear whether the telco plans to pursue through court action or the regulator, CA.
Telkom did however claim that they had a payment plan in place and would repay the debt while Airtel did not respond to the email inquiries regarding the matter.
Safaricom has in the past raised issues concerning legacy debts especially when rivals have attempted mergers and acquisitions. Then acting CEO Michael Joseph wrote to the CA demanding 1.2 billion before approving a deal that failed, to merge Telkom and Airtel.
In 2015, Safaricom temporarily blocked the sale of Orange Group’s majority stake in Telkom Kenya to UK-based equity firm Helios Investment partners, over concerns it would not recover the debt owed by Telkom.
The situation is in a kind of gray area and it’s uncertain what Safaricom will do, although they may lean towards writing it off since they have provision for the debt.
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Alfred Gitonga is a passionate tech news writer with a deep interest in smartphones and related technologies. He is a staff writer at Mobitrends.co.ke.
