France Telecom - growth in Africa

France Telecom seeks African growth

France Telecom expects to boost its revenue from emerging markets in Africa, the Middle East and Asia to 20-25 percent of the total from the current 14-15 percent, Chief Executive Didier Lombard said on Tuesday.

In Kenya to visit the company's latest foreign acquisition, Telkom Kenya, Lombard said he expected to replicate earlier successes on the African continent by turning around the loss-making state-owned landline and mobile operator.

France Telecom made a winning $390 million bid in November for a 51 percent stake in the company, which had already laid off thousands of workers and launched a CDMA wireless network to make itself more attractive to suitors.

Kenya's government retains the remainder, and both are expected to prepare the company for an IPO in three to five years' time.

"It is the policy of the group to buy new assets in Africa. It's kind of a growth engine ... a way to deploy new services, broadband services, which makes a big difference," Lombard said.

France Telecom has 33 million customers across 16 countries in the Middle East and Africa and is trying to get into Vietnam, where it is bidding for a stake of state-owned MobiFone.

"Our target is 20-25 percent of revenue from fast-growing markets," he said, up from a present 14-15 percent. Half of its total revenues come from France.

In June, Lombard said France Telecom will roll out new satellite bandwidth to boost speed for its Kenyan network. The country now relies on costly, slow satellite Internet links that businesses say hurts economic growth.

France Telecom is part of one of three efforts to lay an undersea cable to boost speeds and lower costs. Lombard said he expects that to be operational in the second half of 2009.

Despite a bloody post-election crisis that hurt its economic growth forecast, Kenya has rebounded since a power-sharing deal and many investors see it as one of Africa's best prospects thanks to its strategic location and diversified economy.

Telkom Kenya has a monopoly on landline services with about 280,000 lines. Many subscribers complain that the service is terrible because of decades of corruption and inefficiency but Lombard said this will change.

In Kenya, France Telecom expects to roll out a new GSM network, a competing technology to the CDMA network that it has now.

"The current CDMA network is a strong asset that we will continue to use," Lombard said. "There is no reason not to take advantage of its capability."

But the focus of that network will be rural areas -- of which Kenya has many and for which the network was originally conceived -- while GSM will be aimed more at urban areas, Telkom Kenya's new chief executive officer, Dominique Saint-Jean, said.

Though the networks require different phones, Kenyans are quick to change providers to get the lowest price.

With fewer than 200,000 subscribers, it is tiny compared to leading mobile operator Safaricom with 9 million subscribers and Celtel Kenya's roughly one million.

Many Kenyans have complained about congestion on Safaricom, which is currently floating 10 billion shares in the region's biggest-ever IPO.

Safaricom has said it expects competition from Telkom and the entry of a fourth mobile operator, Econet Wireless.