Telkom Kenya, one of the largest telecommunications companies in Kenya, has been embroiled in a dispute with American Towers Corporation (ATC) over unpaid leases for cellphone towers. This disagreement has now escalated significantly, with major implications for connectivity and investments in Kenya.
ATC Demands Ksh 500M Down Payment and Ksh 150M Per Month to Reactivate Sites
Sonesson further revealed that for ATC to reactivate the disconnected cell towers, “The debt owed by Telkom Kenya has also risen from Sh4 billion in May to Sh7.1 billion as of October. The amount is expected to grow as the debt accrues interest at the rate of Sh300 million per month.”
Given the substantial debt, ATC is demanding a down payment of Ksh500 million and ongoing payments of Ksh150 million per month from Telkom to turn the sites back on.
Unpaid Leases Leading to Major Losses and Halted Investments for ATC
With Telkom Kenya unable to pay its debts to ATC, the company has experienced major financial losses from the unpaid leases. “We have not been paid since January this year. This led to the event we decided to disconnect 900 out of the 1,000 leases that we have with Telkom Kenya,” Sonesson explained.
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On top of the revenue losses, ATC has had to pay Ksh 50M per month in VAT taxes for the uncollected lease payments. And with the debts rapidly accumulating millions in interest per month, ATC has halted further investments in Kenya due to the breach of contract.
Telkom Kenya Claims Inability to Pay, Requires Government Aid
While ATC is demanding prompt payment to reactivate the mast sites, Telkom Kenya insists it simply cannot pay the debts at this time. Telkom management has stated that the company requires a strategic investor and for the government to clear its own unpaid bills to Telkom to establish a payment plan for ATC.
With neither side backing down in the mounting dispute, connectivity for millions of Telkom Kenya customers hangs in the balance.
This far-reaching standoff illuminates risks for foreign investment in Kenya’s telecom infrastructure. Stakeholders on all sides must work urgently to reach a compromise solution.
