In October, National Treasury CS Henry Rotich said that France Telcom Orange was in the final round of negotiations with an unidentified party seeking to offload its 70% stake in Telkom Kenya. The CS further said he expected the deal to be completed before the end of the year. Orange has now announced that Helios Investment Partners has purchased the 70% stake with the government retaining the other 30%. Helios Investments Partners is a former shareholder in Equity Bank having ceded its position earlier this year. It is also an investor in Wananchi Group that owns Zuku. France Telcom, which operates in 19 markets across Africa and the Middle East received bids for its stake from among others Viettel Group of Vietnam.
Orange entered the market in 2007 having paid $390 million for the 70% stake with plans to make the firm profitable and then to take it public in five years. However, things did not go as planned. Orange was always last to innovate failing to take advantage of gaps in the market or even capitalize on its advantages to increase market share. Telkom Kenya enjoys a near-monopoly in the fixed line segment, however a report by the Communications Authority of Kenya shows the number of fixed lines was recorded at 87,774 down from 202,961 as of Q3 2015. The huge decline is as a result of termination of the fixed wireless service by Telkom Kenya (Orange) earlier in the quarter. Other players such as Wananchi Group and Safaricom have ventured into this space by offering bundled service for the home and retail segments such as dual and triple play.
Mobile Money has been one of the rapidly growing segments for telco players in the Kenyan market. Orange Kenya ventured into this space in 2010, 3 years after the launch of Safaricom’s M-Pesa but failed to offer customers a better proposition. Orange Money launched into the market riding on the Equity mobile banking platform, with user accounts mapped onto Equity Accounts meaning that Orange Money customers could perform normal bank transactions on their mobile phones. Still this failed to give it the much needed traction in the market. As of June 2015, Telkom’s Orange Money had the least numbers of subscribers in this market segment with 190,129 subscribers.
In comparison to other players in the telco business, Orange Kenya offered the cheapest data, sms and voice proposition. Even so, it held a distant 3rd place against Safaricom boasting of 24 Million and Airtel Kenya having 12 million subscribers. For a moment, it seemed that Orange gave up on fighting for a place in the market and started playing second fiddle to the market leader Safaricom. One would also recall the green and orange advertisements on Television, which sought to encourage users to get dual-sim devices with a Safaricom and Orange line. Orange forgot they had the best data proposition in the market and a larger footprint of 3G across the country.
It will be interesting to see what Helios does with Telkom Kenya, having not played in the Telco market before. In 2014, Telkom Kenya reported a 5% increase in revenue owing to mobile data and services targeted at large companies. It also outlined plans to improve its mobile network besides revamping its fixed network offering. It also planned to streamline operations to increase its margins. The deal is subject to regulatory approval with the Communications Authority of Kenya saying the telco must pay a Kshs. 1.5 billion debt to get approval for the sale. The debt comprises accrued frequency and operating fees for 2014 and 2015.
I’m sure orange saw this coming, in my opinion – Safaricom’s the leading company in such for a very simple reason: they know what works and what does not. I just passed a safaricom center in town – near Kenya Cinema on my way here and they even had the man-hole cover written Safaricom! It’s not about what people want. They’ll take what you hand them, just be confident bout it. Hakuna haja ya competing with such companies instead try being innovative!
@kijanamuthomi:disqus so you think branding was one of the areas of weakness?
Yes, it was – we both know they had by far better rates than Safaricom both on-net and off-net. This is from a mainstream point of view, other than the green and orange ads; there wasnt much to their name. Perhaps Helios will manage to do so – what do you think?
I think Viettel would have been the best company to take over Orange. I’ve seen what they’ve done in Mozambique, Cameroon and recently Tanzania. Their strategies are similar to Safcoms.
Helios, am not so sure. They have a tower business and a stake in wananchi group. Apart from that, I really don’t know what experience they have in telecoms. Maybe they’ll bring in a technical partner.
On Helios, I am in and out.
Part of me believes they might just work the magic they did at Equity and make Orange a formidable player in this space. They sure do know how to add value into a firm and with their majority shareholding and immense capital, they might institute a proper turnaround.
The other part of me is not very sure about Helios as they have not owned a Telco before and a strategic partner is not always the winning combination.
The winning combination for Orange as I see it is in data and retail market for fixed voice offering. The rest is just noise.
[…] while back, we told you France Telkom Orange was looking to exit the Kenyan market by selling its 70% stake in Telkom Kenya. The government owns the other […]
[…] Telkom Orange announced in November 2015 it was exiting the Kenyan market by selling its 70% stake in Telkom Kenya. Helios […]
[…] Telkom Orange announced in November 2015 it was exiting the Kenyan market by selling its 70% stake in Telkom Kenya. Helios […]
[…] 2017 0 SharesTelkom Kenya has been in transition for quite some time now. This includes the exit of French owners Orange and entry of Helios by the sale of 70 percent stake they had in the company by Orange to Helios […]
[…] the years, the telecommunications company has undergone major changes, including the purchase of 70% of its stake by Helios Investment Partners in 2015, the plan to shed Orange branding as well as the announcement of a management team for its […]
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