France Telecom retains CEO of Kenya unit in Africa management shake-up

• Changes saw the French conglomerate appoint six CEOs for its operations in Madagascar, Mali, Tunisia, Mauritius, Senegal, Niger and Jordan
• Executive shake-up comes as the Kenyan government continues to demand that its French partner fill either the position of managing director or finance director and leave the other to a Kenyan to balance decision making at the firm.
• Telkom Kenya is 49 per cent owned by the Kenya government while France telecom owns the remaining 51 per cent
• Analyst reckons that France Telecom has signalled its confidence in the leadership of the Kenyan business by excluding it from the review.

France Telecom has made executive changes across its Africa operations, which have left the Kenyan unit unchanged despite calls from the government for a management shake-up.

The changes saw the French conglomerate appoint six CEOs for its operations in Madagascar, Mali, Tunisia, Mauritius, Senegal, Niger and Jordan as it races to boost its share of revenues from Africa and Middle East.

“I am confident in their ability to continue to develop the activities of these seven subsidiaries, where we operate under the Orange brand,” said Marc Rennard, senior executive vice president of France Telecom-Orange for Africa, the Middle East and Asia in a statement.

“Development in Africa and the Middle East, where the Group is present in 20 countries, is a major goal for Orange, which has set its sights on reaching 7 billion euros in revenues in the region by 2015.”

The executive shake-up comes as the Kenyan government continues to demand that its French partner fill either the position of managing director or finance director and leave the other to a Kenyan to balance decision making at the firm.

Telkom Kenya is 49 per cent owned by the Kenya government while France telecom owns the remaining 51 per cent—which it acquired in December 2007.

Presently, a larger share of the executive positions in Telkom Kenya including that of CEO, CFO and heads of marketing and technical divisions are occupied by managers from the global operations of the French firm.]

Telkom Kenya has sunk deeper into losses with its management blaming the price war—which saw tariffs in the mobile telephony market drop by half in 2010—for its woes.

In 2010, Telkom Kenya made a net loss of Sh4.3 billion on revenues of Sh10 billion.

The French had hoped in 2008 to return Telkom Kenya to profitability in 2011, but this was scuttled by the decision of the regulator, the Communications Commission of Kenya to cut the mobile tariff rate (MTR) that operators charge each other for interconnecting customers through networks by half to Sh2.21 on July 1, 2010.

At the time, mobile networks were charging customers a minimum of Sh8 per minute, but this has since dropped to an average of Sh4.

But the Treasury, which is the custodian of the government’s investment in the telecoms firm, and the Information ministry are of the opinion Telkom Kenya’s financial problems as partly arising from the structure of its executive, which is heavily tilted in favour of majority shareholder France Telecom.

Analyst reckons that France Telecom has signalled its confidence in the leadership of the Kenyan business by excluding it from the review.

The demand of the Kenya government for a review of Telkom Kenya’s executive team is attached to its recent injection of a Sh2.5 billion loan aimed at speeding Telkom Kenya’s turnaround to return it to the profit zone.

France Telecom has also offered its Kenyan unit Sh5.6 billion.