Uganda: MTN and Vodacom weigh-in for Orange takeover

Mergers, Acquisitions and Financial Results

South African telecoms groups Vodacom and MTN have indicated their interest in a potential acquisition of Orange Uganda, should the cellco’s French parent go ahead with rumoured plans to exit the market, the Daily Monitor writes, citing an unnamed source close to the sale. With six functioning network operators and a seventh due to launch this year, Uganda’s wireless segment is ripe for consolidation, and indeed the process has already begun, with the acquisition of Warid Telecom Uganda by Indian-backed Airtel Uganda in Q2 2013. Although Orange represented approximately 3% of the overall segment at the end of 2013, it has a much stronger position in the wireless data market, claiming more than 10% of the 3G space.

The acquisition of Orange would allow Vodacom to gain a toehold in the crowded sector, but it would face an uphill challenge in transforming the cellco, with its meagre market share, into a serious competitor to leading providers MTN and Airtel. Vodacom has not publically commented on any plans relating to Orange Uganda, although a senior official revealed in late 2013 that the group intends to enter three new markets with populations of more than ten million before the end of the year.

With an already strong position in the market, MTN is perhaps a better fit for Orange. MTN Uganda’s chief executive Mazen Mroue hinted that a takeover was on the cards for MTN: ‘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. Seven operators are too many for a market like Uganda and it is not sustainable. That’s why mergers and acquisitions could be inevitable.’