Telkom Kenya has been put on the spot for collecting up to Sh1.7 billion from customers using a State-owned fibre optic network without a licence.
A report tabled in Parliament shows that the telecoms firm continued to operate the National Optic Fibre Backbone (Nofbi) — which provides telecommunications connectivity in all the 47 counties — despite its permit to do so having expired in 2016.
The document further says that Telkom Kenya had also failed to surrender to the government half of the profits raised from data service providers using the fibre optic network as stated in the lapsed contract.
Section 75(1) of the Public Finance Management Act (PMFA) demands that all receivers of national government revenue raised from income tax,excise tax, value added tax (VAT) and other duties obtain mandatory written permission from the Cabinet Secretary in-charge of the National Treasury.
The government, through the ICT ministry, contracted Telkom Kenya in February 2010 to offer operations and management services for Nobfi. In the deal, the telecoms firm was to undertake minor repairs on the network for a monthly payment of Sh20.3 million.
The contract was subsequently amended in 2013 but its effective date backdated to June 2011 to provide for a revenue share arrangement. The five-year contract expired in 2016, with ICT ministry yet to renew it.
Telkom Kenya chief executive Mugo Kibati confirmed that the firm had no permit to collect revenue from users of the Nofbi as required by law.
“Telkom Kenya has neither been designated as a receiver of government revenue by the CS of National Treasury nor does it collect any revenues as per provisions of neither any law nor regulations,” he said in a brief to the National Assembly’s Public Accounts Committee (PAC) committee.
“Nonetheless, Telkom indeed bills and collects revenues from use of Nofbi on behalf of the Ministry of ICT.”
Telkom Kenya is majority owned (60 percent) by the UK-based private equity firm Helios Investment Partners while the government shareholding is 40 percent.
ICT Principal Secretary Jerome Oluoch claimed he was not aware of the revenue collections by Telkom Kenya until the matter was brought to his attention by the PAC.“There is no form of revenue reflecting in our books arising from TKL (Telkom Kenya). I got interest on this contract when PAC raised the matter when we appeared,” he said.In the lapsed contract, Telkom Kenya was allowed to provide operation and maintenance services, recover costs from realised revenues and split […]