Mobile babel hits high pitch as France Telecom mulls over exit

News of a planned exit of France Telecom from the Africa market has ushered  in an exciting period in the Kenya telecommunication market, coming shortly after announcement of the buy-out of yuMobile.

France Telecom holds a 70 per cent stake in Telkom Kenya, which operates mobile phone services under the Orange brand.

According to TMT finance, a corporate finance consulting company that provides information on mergers and acquisitions, the multinational is said to have initiated the exit from Africa, with a confirmation of official talk in Uganda.

“Aside from Uganda, which is thought to be the only geography where an official process is underway, this could also include Orange’s mobile businesses in Kenya, Democratic Republic of Congo and Niger, among other countries,” wrote TMT Finance.

TMT further said the French firm had appointed financial advisory firm Lazard to find a buyer for its mobile telecommunications business in Uganda as it seeks to leave its non-profitable African markets.

Denied knowledge

France Telkom trades under the names Orange Uganda and Orange Kenya, through which it controls the smallest number of subscribers in both countries.

Both Orange Uganda (Phillipe Luxcy) and Orange Kenya (Mickael Ghossein) chief executive officers have denied knowledge of the parent company’s exit plan, terming it as mere speculation.

“Perhaps the exit strategy is from our shareholders but I do not have this information,” Mr Phillipe Luxcy told Ugandan newspaper New Vision.

Locally, Treasury Cabinet Secretary Henry Rotich — Kenya has a 30 per cent stake in the company — said he had no official knowledge of the move, adding that he had also heard the rumour.

Orange Kenya has the lowest number of subscribers, at 2.2 million (7.1 per cent market share by subscribers), compared with Safaricom’s 20.8 million (66.5 per cent), according to latest statistics from the Communication Commission of Kenya.

Airtel is the second largest mobile operator at 17.6 per cent, with Essar-owned yuMobile third at 8.8 per cent.

The information comes barely two weeks after Safaricom and Airtel moved to buy out yuMobile, which, like Orange, has failed to break even in the Kenyan Market.

The deal is estimated to be worth Sh8.6 billion. It will see Safaricom buy yuMobile’s infrastructure and retain about 130 employees while Airtel is to acquire the yuMobile’s 2.7 million subscribers by taking over their mobile number prefix.

The sale may put Orange under increased pressure as Airtel and Safaricom tighten their market share and change the face of the local telecommunication sector.

Orange Africa operations include Kenya, Uganda, Democratic Republic of Congo, Niger, Côte d’Ivoire, Mali, Guinea and Senegal.

France Telkom singled out its operations in Côte d’Ivoire, Mali, Guinea and Senegal as those registering positive growth in its financials for the year ending December 2013, where it posted a 4.5 per cent revenue decline to 40.981 billion euros.