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May 20, 2014

Orange Telecom Exits the Uganda Market with Sale of Orange Uganda

Orange Telecom, formerly known as France Telecom, announced May 19 that it has sold its Ugandan unit, Orange Uganda, to Africell. The move is in line with Orange's recent steps in optimizing its portfolio by cutting out unprofitable units, especially in Africa and the Middle East.

An Orange press release stated the following: “In the framework of a regular review of its portfolio of assets, today, the Orange Group announced that it has signed an agreement with Africell Holding for the sale of its majority stake in Orange Uganda.”

Orange owned 65.39 percent of Orange Uganda, with HiTS Telecom holding a 31.57 percent stake. HiTS had a recent falling out with Orange over their Uganda unit, believing the company mismanaged Orange Uganda beyond repair.

Perhaps HiTS has a right to be upset, as Orange Uganda was not performing well at all. Even though it was the third largest telecom operator in Uganda, it only had 620,000 subscribers at the end of 2013. The largest cellular provider in Uganda, MTN, had them completely beat with over 8.5 million subscribers, with the second largest, Bharti Airtel, having 7.5 million.

Orange appears to be interested in selling off any units that are not producing a profit, or even reaching one of the top spots in the country. The sale of the Uganda unit was expected, with announcements being made earlier in the year. It was rumored that MTN was interested, on grounds that they had made statements that the Ugandan cellular market would be consolidating this year. This was demonstrated with the recent purchase of Warid Telecom by Bharti Airtel.

The transaction is not complete, though, as it is still subject to approval by authorities in Uganda.

It is also expected that this is only the first of several African units being sold off by Orange. It is suspected, though not officially confirmed, that Orange will be selling off its companies in Niger, Kenya, and the Democratic Republic of Congo.

While Orange is selling off several of its businesses, this does not mean that the company is in trouble. It is still going strong in Europe, and they recently renewed their license to operate in the Middle Eastern country of Jordan for five more years. On May 16, their shares also rose when rumors spread that they would be purchasing a telephone subsidiary from Bouygues.

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