Can Orange really buy UTL?

A resurgent UTL underpinned by an aggressive come back but also struggling with constant CEO layoffs, a vibrant Orange Uganda backed by hyper-fast data and a French telecom giant, and the duopolyMTN and Airtel — up to its usual antics: just when it seemed like we’d finally reached some semblance of stability in Uganda’s telecom market, after the Airtel and Warid merger we heard other rumors in May this year that MTN may be ramping up to make a bid for UTL.  Well that would have been a good strategy especially for MTN but since it has taken this long, further rumors are now pointing more to an Orange acquisition of Uganda’s oldest telecommunication network. If the rumors hold water and Orange elects to proceed, we could be in for an unexpectedly turbulent 2014 (and beyond) for Uganda’s telecommunication sector, as regulators and executives spar over the viability and wisdom of allowing another merger like that of Airtel and Warid and officially Uganda would have only three major carriers. So the question is, who would win that battle?

This isn’t UTL’s first rodeo

Of course, this isn’t UTL’s first rodeo. The network, majorly owned by Libya’s LAPGreen Invetments , with 69 percent shares is still healing from the aftermath of Libya’s 2012 events. These events cost the company highly as the competition has been able to roll out several technologies with UTL still stuck with 2G and a small Trial 3G network which has been in existence in what has started to feel like ages.

Whether the government would allow a smaller carrier — Orange currently has the biggest data subscribers in Uganda — to take a stake in UTL is now the billion-dollar question. For the Telco regulator UCC, it’s primarily a question of whether a consolidation would help or harm competition. With Orange and UTL both hemorrhaging subscribers, teaming up might have put the two in a better position to square off against the Big Two; UTL has started adding or can I say regaining customers after its recent come back; Orange still struggles with voice subscriber numbers and yet it is a public secret that they command the majority of the data market. In other words, it’s fair to call UTL and Orange more “competitive” now, at least by some metrics — and that makes a merger, which would bring Uganda down to just three national wireless providers, which could be less appealing in the eyes of competition-minded regulators.

The Technical Meger mess

But regulation company acquisition politics aside, none of this touches on the technical nightmare that engineers at Orange and UTL would face in combining their networks ask those who have survived the Airtel-Warid merger. The merged company would be dealing with over six distinct bands of spectrum and effectively four disparate network technologies. UTL would be gaining a 3G -UMTS and 4G-LTE network on its portfolio and Orange would be dipping its straw into an UTL’s country wide wired legacy telephony infrastructure also landlines.  If the merger took place there would also be a lot of  duplication of voice service on both networks 2G networks with a lot of spectrum to play around with.

Let’s also not rule out, public interest groups that will come out against a possible deal after the issues the current Airtel and Warid subscribers have gone through during the transition.

The writer wonders the repercussions of what he has just written with a smiley face;

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