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Orange hires adviser for Uganda exitPublish Date: Mar 06, 2014
Orange hires adviser for Uganda  exit
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French operator Orange has mandated Lazard to find a buyer for its mobile telecoms business in Uganda, hot on the heels of the sale of Warid Telecom’s local unit to Bharti Airtel, sources told TMT Finance.

Orange is thought to be planning an exit from several markets in Africa where it does not already hold a number one or two spot. 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 others.

Uganda’s mobile market is dominated by MTN and Bharti Airtel. The latter acquired the third largest operator Warid Telecom for around US$100m from the Abu Dhabi Group in May 2013. MTN has around 8.5 million subscribers in Uganda, while post-merger, Airtel has over 7.5 million. The next largest is Uganda Telecom’s UT Mobile unit, with Orange Uganda among the country's smaller operators.

According to sources, the most logical buyer of the Orange Uganda unit could be MTN. The South African operator has previously been vocal about consolidation in the country, and will be keen to firm up its number one position, with second place Airtel gaining valuable ground. While Airtel is also clearly in acquisition mode across Africa, sources said it was unlikely the Indian telco would make a move for Orange Uganda so soon after its Warid buyout.

With such a crowded market, consolidation will be the most likely outcome, although there could also be interest from newcomers, sources commented. Vodacom is thought to have made a bid for Warid Telecom Uganda, before losing out to Bharti Airtel, and although Orange Uganda is substantially smaller, the unit could give Vodacom a footstep in a market where it clearly sees potential.

Next up for Orange could be the sale of its mobile unit in Kenya, formerly Telkom Kenya Orange, which has been struggling against larger rivals Vodafone-backed Safaricom and Bharti Airtel’s local unit, with continual losses which are unlikely to plateau until 2016 at the earliest.

A decision by Orange to exit the market could be accelerated following the news that fourth place Essar’s yuMobile will be sold and split between Orange’s rivals, with Safaricom to buy yu’s infrastructure, and Airtel to get its 2.7 million subscribers.

 

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