Orange reviewing African options

Orange has begun a strategic review of its assets in Uganda and Kenya, although it has not confirmed that it is looking to sell either unit.

While it has been reported that Orange could pull out of markets in Africa where it does not hold first or second place – which could include Democratic Republic of Congo, Kenya, Niger and Uganda – the group has stated that the goal of the review is to “optimise operational performance in order to pursue growth and create value in each market.”

That said, Orange has not ruled out a sale either, and has reportedly brought on merchant bank Lazard to assess potential buyers for its Uganda unit. MTN and Bharti Airtel dominate the market in Uganda, particularly after the latter acquired the former number three operator Warid Telecom from the Abu Dhabi Group in May last year.

Currently MTN has around 8.5 million while Airtel has over 7.5 million. Orange severely lags behind these two, losing out on third place to Uganda Telecom’s UT Mobile.

Orange has stated that “one option would be to find new partners in these countries to ensure that the necessary financial and operating resources are available to maintain investment and support the continued development of operations.”

Whether this means a sale is unclear, but MTN has made no secret of its desire for consolidation in the Ugandan market so would be a likely candidate for an acquisition, especially considering Airtel has so recently acquired a smaller Ugandan operator. However, Orange’s Uganda unit could also be acquired by a newcomer.

Vodacom is believed to be interested in the market, having reportedly bid on Warid Telecom Uganda. Orange Uganda is a considerably smaller operator but its established market presence may be enough of an inroad to pique Vodacom’s interest.

There are no obvious candidates for a buyer for Orange’s Kenyan unit, but the group may well be keen to sell following the announcement that number four operator Yu – previously own by Essar - is being sold off to market leaders Safaricom and Airtel.

Orange has commented that “our commitment to Africa and the Middle East remains a priority and there has been no change in strategy in this regard.”

 

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