France Telecom is pursuing its expansion plan with vigour in the English speaking Africa. The company today announced its plans to enter the Ugandan mobile market.
The Financial Times reported that 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.
In September this year the company announced that it focusing on Africa aiming small deals with high-growth, targeting acquisitions in English speaking countries on the continent.
France Telecom’s Chief executive, Didier Lombard told the Financial Times at the time that this strategy could see an increase in payouts to shareholders.
He also predicted it would be largely unaffected by the economic slowdown, the newspaper said.
Free cash flow generated in 2008 would probably be “a little bit better” than the 7.8 billion euros ($10.9 billion) the company had forecast, Lombard told the paper.
Anne Bouverot, head of international development at Orange, said Uganda presented a good opportunity for France Telecom, with mobile penetration unusually low at 17 per cent. A large population and expanding economy made Uganda a market with “a high potential for growth,” she said.
Nonetheless, the group will face strong competition, with the mobile market already a battleground for African groups MTN and Celtel, Uganda Telecom and Warid.
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.