Viettel Group Drops Its Bid To Acquire Orange Kenya

Mergers, Acquisitions and Financial Results

The Vietnamese firm, Viettel Group, has bailed out on Orange Kenya after showing interest to acquire 70 percent of the company; this leaves the company looking for a plan ‘B’.

‘Viettel have indicated that they are no longer keen on buying the stake. So we expect France Telkom to look for another buyer or declare what they plan to do should they fail to get another buyer,’ said Henry Rotich, Treasury secretary.

He however clarified that it was Orange that was selling its shares and not Telkom Kenya.

Telkom Kenya is jointly owned by the Treasury and Orange, which was in 2007 allowed to buy a majority stake in the loss-making company after undertaking to turn around its fortunes.

So this is where the deal got sour; the Kenyan government refused to give in to the demands of Viettel. The Vietnamese firm wanted the government to immediately extend all telecommunications licenses held by Telkom Kenya for 15 years and an additional 10 percent of the government shares in Telkom (meaning Viettel would be an 80 percent shareholder of the company).

ICT secretary Fred Matiang’i said: ‘There should not be panic that Viettel has thrown in the towel. In fact we are aware that there is a local IT firm and some Kenyans in the diaspora who have expressed interest in the company’

The minister declined to name the IT firm and the diaspora investors, saying it was too early and that the parties had yet to open formal negotiations with France Telecom.

Dr Matiang’i dismissed some of the conditions Viettel had put on the table as unrealistic, insisting that any investor looking to buy a stake in the firm must adhere to existing laws.

France Telecom, which owns 70 percent in Telkom Kenya, has offered several reasons for its planned exit, including claims that industry regulator the Communications Authority of Kenya (CAK) has not established a level playing field to help stop price wars.

“Kenya’s telecommunications market is not yet fully tapped and there is still room for growth for all players. France Telecom’s exit does not mean that ours is a non-performing market,” Dr Matiang’i said.

If France Telecom gets a buyer for its stake in Telkom Kenya next year, it will be the second investor to pull out of Kenya in as many years.

France Telecom said that their decision to leave had also been informed by ICT secretary’s signal that he intended to cancel a management contract that the company had with the government to manage the National Fibre Optic Infrastructure.

Source:  TechMoran 25 November 2014