France Telecom is stepping up its expansion into anglophone Africa by taking its Orange mobile brand into Uganda.
The French telecoms group is joining forces with Hits Telecom Uganda, a new mobile operator owned by a group of Middle Eastern investors, which last year acquired a full telecommunications licence in the east African country of 30m people.
The licence, along with Hits’ existing GSM network, will be transferred into a joint venture to be called Orange Uganda. France Telecom will own 53 per cent of the venture, and provide roughly half the $200m investment planned over the next three years to roll out Hits’ existing network across the country. The Orange brand will be marketed to customers from next year.
Anne Bouverot, head of international development at Orange, said Uganda presented a good opportunity for France Telecom, with mobile penetration unusually low at just 17 per cent. A large population and growing economy made Uganda a market with “a high potential for growth”, she said. Nonetheless, the French group will face strong competition with the mobile market already a battleground for African groups MTN and Celtel, Uganda Telecom and Warid, the Abu Dhabi-based telecoms company.
The Uganda investment is the first concrete evidence of France Telecom’s revived African ambitions. Didier Lombard, chief executive, told the Financial Times last month that France Telecom was turning its attention back to Africa after the French group’s abortive $41bn bid for TeliaSonera, the Nordic operator.
Mr Lombard is hoping that Africa could be to his company what Latin America has been to Telefónica of Spain: fast-growing emerging markets with the potential to outstrip revenues from its home market.
France Telecom has operations in 16 African countries, predominantly in French-speaking west Africa. Last year, it made its first major foray into English-speaking Africa – considered to have larger potential markets and more wealth – with the €400m purchase of a 51 per cent stake in Telkom Kenya.
But since then it has struggled to secure sizable acquisitions and is facing increasingly fierce competition from other foreign telecoms groups including Vodacom of South Africa and Vodafone of the UK.
France Telecom recently lost out to Vodafone in the privatisation of Ghana’s incumbent operator.
The Uganda deal shows that the French group is having to settle for smaller operations, often starting from scratch. Although Hits has a fledgling network, largely based in the capital Kampala, it has not yet marketed services to customers. Hits was set up in 2007, with equity financing of $200m from investors led by International Investment House, an Abu Dhabi-based private equity firm targeting infrastructure projects.