Vodacom, MTN telecoms in race to acquire Orange Uganda operations Market share battle

Kampala.

Having lost the Warid Telecom deal to Bharti Airtel last year, Vodacom is once again in the race, battling it out with MTN Group to negotiate for a possible acquisition of Orange Telecom.

A source close to the matter but asked not to be named because of the sensitivity of the matter, told the Daily Monitor that the bid to acquire Orange Telecom has so far attracted two contenders including MTN and Vodacom, both South African companies.

Orange’s major strength in Uganda is in the provision of data services, where it identified a niche that has been its major source of revenue since its entry in the Uganda market in 2008.

Vodacom’s chief executive officer Shameel Joosub was quoted by Bloomberg late last year saying the telecom intends to expand its footprint in at least three new countries which have a population exceeding 10 million by the end of 2014 through acquisition of local operators.

Apart from its headquarters in South Africa, Vodacom has a limited footprint in Africa, with operations only in Tanzania, the Democratic Republic of Congo, Mozambique and Lesotho, compared to MTN group which has operations in 21 countries in Africa and the Middle East.

If it acquires Orange, Vodacom would have increased its presence in East Africa.

Like Orange Uganda chief executive officer Philippe Lucxey, his MTN Uganda counterpart Mazen Mroue remained tight- lipped about the acquisition reports.

He, however, said given the high number of telecom operators in the market, mergers and acquisitions are inevitable.

“We don’t have any official information to share with you at the moment about the said transaction. However, as MTN’s strategy is to drive sustainable growth which comes from existing services and mergers. The group is always looking for sustainable acquisition and mergers where it operates,” he said.

He added: “Seven operators are too many for a market like Uganda and it is not sustainable. That’s why mergers and acquisitions could be inevitable,” he said on Monday.

Recent acquisitions in Uganda's Telecommunication market
Market experts have always said some telecom operators are struggling to break-even. This could force them into consolidation through mergers or acquisitions.

Warid Telecom, which was said to be making unsustainable profits because of its low pricing model was acquired by Airtel last year. Orange entered the Uganda market in 2008 through a partnership with Hits Telecom Uganda, in which it bought a 53 per cent stake. Under the acquisition terms, Orange was to invest an estimated $100 million in rollout activities by 2011.