France Telecom threatens Kenya exit

France Telecom has threatened to quit Kenya if the country’s government doesn’t return its investment in local carrier Telkom Kenya.
The French incumbent is reportedly in talks with Kenya’s government to re-coup the $385 million (€282 million) it paid for a 51% stake in the local mobile carrier, and is seeking another $300 million in compensation, Ratio Magazine reports.
France Telecom issue the threat to quit during the talks with Kenya’s government this week, though it is not clear if the government acquiesced to the telco’s demands as the outcome is shrouded in secrecy, local reports state.
The carrier claims dominant mobile operator Safaricom enjoys regulatory favours that give it an unfair advantage over rivals, including high interconnection fees that make it hard for subscribers to switch supplier.
France Telecom also claims Kenya’s government stripped Telkom Kenya of key assets as its purchase was going through in December 2007, and says an equipment supply deal struck by Telkom Kenya’s former management team with Rapid Communications forced it to accept terms it hadn’t agreed to.
The dispute has cast doubt over government plans to sell its 49% stake in Telkom Kenya via an IPO this year, and could also deal a blow to France Telecom CEO Stephane Richard’s plans to double revenues from emerging markets in the next five years.
Those plans have already been impacted by France Telecom’s failure to take control of Egyptian carrier Mobinil, following a court ruling.