French telecom giant
) is considering options to either reduce its stake or sell its
Kenyan and Ugandan operations, both of which have been struggling
in recent years. The news boosted the stock price as it ended
3.88% higher on Monday trade on NYSE.
Orange holds a 70% stake in Telkom Kenya with the remaining
30% being held by the Kenyan government. But the third largest
mobile operator in Kenya has been struggling to cope with rival
Safaricom's infrastructure capacity and Airtel's continuous
mobile subscriber gains.
The story is quite the same in Uganda, where the telecom
behemoth has failed to make a solid impression as the market
continues to be dominated by South Africa's MTN and India's
Airtel. Notably, Orange has a 95% stake in its Ugandan
The company now wants to bring in new partners in these two
countries to ensure enough financial and operational resources to
support investment and maintenance of operations.
Africa and Middle East remains an important market for Orange
as the company faces stiff competition in key European markets.
The telecom carrier has a presence in 17 countries with a total
subscriber base of 88 million at the end of 2013.
Recently, Orange reported 2013 earnings per share of 71 euro
cents (approximately 94 cents), missing the Zacks Consensus
Estimate of $1.27 but improving from last year's earnings of 31
euro cents (approximately 39 cents) driven by the growing
numbers of mobile customers and 4G mobile broadband
customers in France.
We believe that if Orange finds a suitable partner it will be
in a much better position to fight the competitive challenges of
its rivals. However, if the company fails to find a suitable
partner it might face a similar fate as Yu Mobile, which had to
sell its operations in Kenya to Safaricom and Airtel after
suffering continuous losses.
Orange, currently carries a Zacks Rank #3 (Hold). Other stocks
worth considering within this sector are
SK Telecom Co Ltd.
Shenandoah Telecommunications Co.
Level 3 Communications Inc.
). While SK Telecom and Shenandoah Telecommunications carry a
Zacks Rank #1 (Strong Buy), Level 3 Communications carries a
Zacks Rank #2 (Buy).
LEVEL 3 COMM (LVLT): Free Stock Analysis
ORANGE-ADR (ORAN): Free Stock Analysis Report
SHENANDOAH TELE (SHEN): Free Stock Analysis
SK TELECOM CO (SKM): Free Stock Analysis
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