Before turning Orange and now to blue and yellow, Telkom Kenya was once part of a brand with a fabled history that saw Kenya export telecommunication equipment to the USA and Europe.Then under the umbrella of the Kenya Posts and Telecommunications Company (KPTC), the firm was locally manufacturing telecommunication equipment for export at the now-defunct Gilgil Multipurpose Manufacturing Complex. The factory had been birthed in 1987 following the inking of a Sh86million deal between the corporation and ISKRA Commerce, a manufacturing firm from the former Yugoslavia tasked to build and train staff at the plant. The telco plant was a result of President Daniel Arap Moi’s 1982 trip to Yugoslavia which he inaugurated on December 5 1988. It would manufacture switchboards, telephone sets, power units and cables.The corporation’s chairman John .N. Kariuki projected that the factory would produce 100,000 telephone sets per year. In the same December, KPTC entered an agreement with global telco giant American Telephone and Telegraph (AT & T) that would see it export telecommunication equipment to the USA and Europe from the Gilgil factory.The three-year contract tipped to earn Kenya Sh60 million, would see the corporation supply AT&T with cable forms for use in its plants abroad.
The Standard reported on the uniqueness of the project as the “first and the only one of its kind in sub-Saharan Africa.” “Just a quarter-century after independence, Kenya is able to supply countries which were the original suppliers of such equipment,” wrote the Standard. Kipng’eno Ng’eny, the Managing Director of the corporation, said that it was “symbolic of what was to come in the future.” AT&T’s International Sales Manager, John Sihra praised the “high quality of equipment” made at Gilgil. Almost a year later, John Kamotho the Minister for Transport and Communication said that Kenya had saved Sh343 million in foreign currency over the last three years because of local production of telco equipment at Gilgil. The plant had over the period assembled 1,800 switchboards, 1,000 power units, 30,000 telephones and 8,400 cable pieces.
By then KPTC was splashing millions yearly for advertising. Later that year, press reports emerged that the KPTC was seeking a loan from the African Development Bank (ADB) to fund an expansion of the manufacturing complex. The funds were meant to meet ‘expected demands’ in Europe and America. The Finance Minister, Mathias Keah said that the amount would be over Sh110 million. In the same year, 1989, the corporation’s MD announced that Japan would soon start assembling and manufacturing equipment in Kenya. The 90s heralded a turbulent decade for the KPTC including the cellular era. MD Ng’eny, rebutted accusations that they were producing substandard telephone equipment. He said their products were “competing favourably in the market.” However, the corporation had put in austerity measures and cut off sponsoring of programmes in the Voice of Kenya (VoK) Television and Radio (now KBC). Ng’eny called this “re-organisation” and also announced that they were spending over Sh487 million to build a “35-storey” head office along Nairobi’s Kenyatta Avenue. In June 1991 Joseph Kamotho announced a liberalisation programme. Now, people who wanted to install telephones in their houses or offices could now hire private engineers.
Calls to split the corporation were also gaining ground with the then Finance Minister Musalia Mudavadi saying that “a fundamental restructuring” had been initiated to break the corporation into separate entities. This was six days after the long-serving Mr Ng’eny was “forced” to retirement.
An editorial by the East African Standard (now the Standard) blamed him for the corporation’s woes. Under Mr Ng’eny, it said, the corporation was run like “a private empire.” Bosses seemed accountable only to forces outside the corporation and showed little regard to taxpayers, it said. By then, massive layoffs were underway. Workers protested, some demanding that the corporation “retire Ng’eny kin first.” Meanwhile, more than 300 workers in Mombasa were being forced out of staff houses rented by the corporation. The Parliamentary Public Investment Committee would later in 1994 accuse Mr Ng’eny of awarding contracts behind the backs of the board of directors. The Gilgil plant, however, remained bullish with the East African Standard reporting on April 15, 1994, that it had registered Sh230 million sales over the last six months. The manager, John Musonik, expected it to double sales the next financial year and become fully self-sustaining in the next five years.
By 1996 the corporation had concluded the liberalisation of the supply, installation and maintenance of mobile cellular telephone sets. And on July 1 1999, the privatisation of the Kenyan communication sector took a major step after Telkom Kenya, its subsidiary Safaricom and the Postal Corporation received their 25-year trade licenses from the Communications Commission of Kenya (now Communications Authority of Kenya). Telkom Kenya would now be the telecommunications service provider while Safaricom would concentrate on the cellular market. Telkom Kenya would initially own a 60 per cent stake at Safaricom. In a supplement to mark its launch in the East African Standard, the telco said it intended to sell 26 per cent of its equity to a strategic investor followed by a 20 per cent initial offering at the Nairobi Stock Exchange (now Nairobi Securities Exchange).
In 2007, Orange bought a 51 per cent controlling stake in the company for $390 million (Sh40 billion). Helios Investment Partners later acquired the entire 70 per cent stake owned by Orange ceding a 10 per cent stake to the National Treasury; it retained a 60 per cent shareholding while the government’s share went up from 30 to 40 per cent. In its rebranding last week, the company’s new Chief Technology Officer John Bororot rightfully referred to the telco as a ‘sleeping giant’. It lags at number three in market share behind Safaricom and Airtel, respectively. Kenyans can now only now focus their eyes on the new team tasked to awaken this giant.