After the apparent failure to secure an outright sale for its Ugandan operation, Orange Group has shifted focus to finding a minority investor as it seeks to reduce exposure to an increasingly difficult market.

Sources at Orange Uganda said the substantial debt on the firm’s balance sheet and infighting between Orange Group and a local minority shareholder over terms of a previous debt transaction have hindered the company’s pursuit for a buyer.

Faced with about $200 million in debt and a fairly thin asset base, the telecommunications operator’s underlying financial value is perceived as too small to justify the offer prices made to investors.

In 2012, Orange sold 180 transmission masts to Eaton Towers Ltd, leaving the company with few core technical infrastructure units.

Under the new strategy, Orange is seeking a new minority investor to inject more than $41 million into network projects. The commercial option is expected to reduce recapitalisation pressures and raise the company’s capacity to satisfy changing consumer needs.

Though this strategy allows the firm to buy time before exiting, the inability to secure a big buyer could put more pressure on the French owners to discount their offer.

Though the firm has been in the Ugandan market for five years, its key performance indicators remain weak. The company is yet to reap profits with net losses averaging between Ush50 billion ($19.6 million) and Ush70 billion ($27.5 million) per year since 2009, according to insiders at Ernest and Young, the firm’s auditors.

In addition, its market share is valued at less than 20 per cent — a figure deemed too small for big investors. In spite of highly popular Internet and data products, Orange’s ability to grow revenues appears weak.

Efforts to obtain details from Orange Uganda on the search for investors proved fruitless by the time of going to press. Philippe Luxcey, the company’s chief executive officer, declined to comment when contacted by The EastAfrican on Thursday.

Sources in Nairobi indicate that Orange’s Kenyan subsidiary has shortlisted a number of investors and given them time to carry out due diligence on the business and make offers.

“A large Asian telecoms operator wants to acquire a Kenyan GSM operator,” said a Kenyan source.

Telecommunications analysts say Orange Uganda’s customer base is not attractive to older rivals.

There are a large number of double sim card customers on the Orange network who want high speed Internet and data packages, and mobile money services offered by its competitors. This has left the operator with many low- spending subscribers who spend more on rival products and services.

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A limited upcountry network has also played into its rivals’ hands, analysts say. Orange Uganda’s total subscriber base is estimated at one million, compared with Airtel’s 7.2 million subscribers and Uganda Telecom Ltd’s two million subscribers as of 2012, industry sources indicate.

“Further investments in Internet and data products by Airtel and MTN Uganda have partly diluted Orange’s primary niche in the market. A combined regional wide or pan African acquisition deal that offers big players like MTN opportunity to enter elusive markets like Kenya would appear more attractive than single territory deals,” said a commercial analyst at Airtel Uganda who requested anonymity.

Additional reporting by Peterson Thiong’o