After months of speculation, France's Orange Telecom has finally sold its Ugandan operation to Africell Holdings and is now apparently getting ready to do the same in Kenya.
Africell is a privately owned East African telecom company with operations in African countries including the Democratic Republic of Congo (DRC), Sierra Leone and Gambia. The value of the deal with Orange has so far not been disclosed. It is subject to regulatory approval.
Orange's East African operations have been noted for the poor performance over the last few years, though Orange has been more successful elsewhere in Africa. Two months ago, Orange said it was in the process of reviewing its Kenyan and Ugandan operations to determine their viability as well as the possibility of acquiring new additional partners to consolidate the business amid stiff competition.
"We are in the process of reviewing the Kenyan operation," Orange said.
The company has engaged Lazard Consultants to conduct a strategic review of its operations in East Africa. In Kenya, the company experienced a drop in its revenue to 9.7 billion Kenyan shillings (US$114 million) in 2013 from 10.2 billion shillings in 2012. The operator has said it is considering pulling out of Kenya because the sale of the Essar Group's yuMobile unit to Airtel and Safaricom will ramp up competition as the rival operators consolidate their dominance in the country.
As a result of the possible exit, the Kenyan government has threatened to cancel a contract with Orange. The Kenyan government is a joint owner of Orange Telecom Kenya. Orange Telecom Kenya has been the principal manager of the state-owned National Fibre Backbone Infrastructure (NOFBI).
"We expect many more operators to be sold in the next few years because large operators are consolidating their operations and in the process knocking out new entrants despite the money and the technology," said Amos Kalunga, telecom analyst at Computer Society of Zambia.
Orange had been facing stiff competition in Uganda from Warid Telecom, which was bought by Airtel for $100 million last year.
Operators face a voice market that is becoming saturated, while revenue from short messaging services drops.
Orange currently has operations in 15 African countries including Botswana, Egypt and Niger.