NAIROBI, Nov 16 (Reuters) - Kenya's treasury is taking over state-run Telkom Kenya's 60 percent stake in mobile phone operator Safaricom in a transfer valued at 64 billion shillings ($963.8 million), a senior official said on Friday.

The statement was published in local newspapers on the day the finance ministry was due to announce a winning bidder for a 51 percent stake in Telkom Kenya.

Treasury Permanent Secretary Joseph Kinyua said by delinking Safaricom from Telkom Kenya the government intended to fulfil two goals.

It would attract a genuine investor in Telkom who saw value in the company rather than its share in Safaricom -- rated east Africa's most profitable firm -- while allowing Telkom to offer mobile phone services in competition with its former subsidiary.

"Against this background TKL (Telkom Kenya Limited) is being sold without its Safaricom interest, which is in the process of being transferred to Permanent Secretary/Treasury," Kinyua said.

"The transfer of Safaricom from TKL ... is priced at 64 billion shillings. These are the resources needed to restructure the TKL balance sheet."

The four contenders qualified to bid for Telkom Kenya are Reliance Communication Ltd. <RLCM.BO> of India, South Africa's Telkom <TKGJ.J>, LAP Fund of Libya and a consortium led by France Telecom <FTE.PA>.

The winning bidder is expected to turn around loss-making Telkom Kenya and prepare it for an initial public offering on the Nairobi Stock Exchange (NSE).

Telkom Kenya has a monopoly on landline services in the east African country. Many businesses complain inefficiency and corruption has made its services too expensive.

The government is also in the process of preparing to offload a 25 percent stake in Safaricom in an IPO on the NSE at a date to be announced. Britain's Vodafone <VOD.L> owns the rest of Safaricom. (Reporting by George Obulutsa; Editing by Quentin Bryar) (([email protected] +254 20 2224 717; Reuters Messaging: [email protected])) ($1=66.40 Kenyan Shilling)

Keywords: KENYA SAFARICOM/