October 1, 2015 / 2:36 PM / 4 years ago

UPDATE 1-Orange in final talks to sell Kenyan mobile stake - minister

* Orange seeks to exit Kenya after eight years

* Minister says transaction to be completed “very soon”

* Local media says buyer likely to be Helios Partners (Updates with reports of potential buyer)

By Duncan Miriri

NAIROBI, Oct 1 (Reuters) - France’s Orange SA is in the final round of talks to sell its 70 percent stake in its Kenya business, the country’s finance minister said on Thursday, without naming the buyer.

Orange is the second international operator to quit Kenya, where the strong market position enjoyed by Safaricom, part-owned by Vodafone, has made it difficult for rivals to make a profit. India’s Essar Telecoms sold its Kenyan business, Yu, last year.

The decision to sell its holding is a setback for Orange, which paid $390 million for its stake in 2007, aiming to capitalise on what were fast growth rates. Its plan was to make the unit profitable before taking it public in five years.

“(Orange) wants to exit so they are selling their 70 percent,” Finance Minister Henry Rotich, who oversees the government’s 30 percent shareholding in Orange Kenya, told Reuters. “They are in final negotiations.”

Rotich said he expected the transaction to be completed “very soon”, possibly before year end.

Local newspapers have reported the buyer of the shares is Africa-focused investment firm Helios Partners. No-one at Helios was immediately available for comment.

Orange declined comment on the identity of the buyer or the price, but said Africa and the Middle East remained priorities and growth engines for the group.

It is in negotiations to acquire Bharti Airtel’s mobile operations in Burkina Faso, Chad, Congo Brazzaville and Sierra Leone.

Orange has about 100 million subscribers in Egypt, Morocco, Tunisia, Senegal and Mali among other countries, bringing in nearly 10 percent of group sales last year. Revenue from those operations rose 7 percent to 4.29 billion euros ($4.8 billion)and operating profit reached 1.4 billion euros.

Analyst Faith Mwangi at Standard Investment Bank said Orange Kenya had struggled despite enjoying a monopoly in fixed-line telephones. “They essentially failed to innovate,” she said, adding Orange’s strategy of offering cheaper calls had lately helped it claw back some market share.

Orange increased its mobile subscribers to 4.0 million in the quarter through June from 3.7 million in the previous quarter, the Communications Authority of Kenya regulator said.

One of the main advantages of Safaricom, which has 67 percent of Kenya’s 36 million mobile users, has been the development of its pioneering M-Pesa mobile money system, which allows users of even the most basic mobile phones to make payments.

Kenya has two other telecom operators, India’s Bharti Airtel and Finserve, owned by one of the country’s biggest banks’ Equity.

$1 = 0.8937 euros Additional reporting by Leila Abboud in Paris; Editing by David Holmes

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