The recent move by French telecommunications firm Orange to sell its 70% stake in Telkom Kenya to Helios Investment Partners has raised questions over how, if at all, the East African country's telco sector will respond and what lies in store for Telkom Kenya going forward.

MD of Africa Analysis Dobek Pater said much depends on the approach taken by Helios, while also noting that the Kenya government owns a 30% stake in the telco and could have more say in what happens to the company.

"In the case of Multi-Links in Nigeria, for instance, Helios took out the tower and some of the fibre assets (connecting some of the towers to the national network – fibre backhaul from the towers) and on-sold the rest, if I remember correctly. It may want to do something similar with TE, e.g., retain some of the assets key to its tower business and sell the operations to a third party," said Pater.

He also said the move is not necessarily a game-changer for the market.

IDC Research Analyst Telco & Media Leonard Kore agrees that the acquisition is a not a game-changer in the local telco sector and says Safaricom is the firm with reported profits and currently dominates the sector with over 90% revenue market share in voice and text segments.

"They also command a similar percentage in data (85.5%), in which Orange Kenya (0.01%) has now being overtaken by newly launched MVNOs i.e. Equitel with 0.06%. But another key reason is mobile money services, which is now being used by telcos such as Safaricom to lock in customers in their networks. This increases cost of customer acquisition for competitors reducing customer switching between telcos. Safaricom also commands a large marketing budget and is able to command mindshare countrywide," said Kore.

He says that in order to compete effectively in the local telecom sector, Helios will have to prioritise getting Telkom Kenya to profitability as soon as possible. "Optimising costs and getting rid of some of the products and services that have not been doing well will be key. Telkom needs to stay competitive with affordable pricing but not provoke price wars as this has not worked well even with other players in the market. Helios can also focus on tower sharing and MVNO wholesale business as alternative revenue generation mechanisms," Kore continues.

While also focusing on leveraging their connectivity asset base of fibre and ownership in submarine cables, Helios will need to ensure renewal of the National Optic Fibre Backbone Infrastructure contract which could be terminated if allegations of the telco's mismanagement of the project continue.

They will need to reinvent the wheel, says Kore. "Depending on Helios strategy it will be interesting if they rebrand Telkom to increase mindshare and capture more lucrative segments such as the youth with innovative VAS. This is something Orange Telkom failed to do. The telco already rebranded when Orange took over. Airtel has also rebranded four times in the past and this has confused customers because of multiple brand identities. Either way Helios will have to inject funds to increase market presence if they are to gain any market share."

IDC believes another option is to focus on enterprise services e.g. IT services such as Cloud for SME.

"Local bred companies such as Angani (although they have run into problems) have demonstrated that there is a growing demand for affordable cloud services in the country. The type of partnerships they form will be crucial in gaining any ground in this space," says Kore.