Company acquisition and financial performance in the telecommunications industry : A case study of Echotel Communication Proprietary Uganda Limited

Abstract

The study examined the influence of company acquisition on financial performance in the telecommunications industry in Uganda and focused on Echotel Proprietary Uganda Limited as a case study of. It was guided by three objectives, to examine how acquisition has mitigated company weakness and bolstered company strength at Echotel Proprietary Uganda Limited, to assess how acquisition has contributed to achieving market power through reduced competition at Echotel Proprietary Uganda Limited, to examine how acquisition has created synergies and created value addition for Echotel Proprietary Uganda Limited. The study adopted both phenomenological approach and used both quantitative and qualitative information. The study population was 110 and a sample size of 102 respondents. The study revealed that the most effective contribution of company acquisition to financial performance in EPUL is to created synergies and creation of value addition (Adjusted R Square of 71.7%), followed by market power through reduced competition (Adjusted R Square of 67.1%) and the least contribution is to mitigating company weaknesses and bolstering company strength (Adjusted R Square of 24.3%). In conclusion, it is noted that there is a statistically significant relationship between company acquisition and financial performance at EPUL and hence the null hypothesis was rejected. This is because all the p-values for the research objectives were below the alpha of 0.05. The study recommended that EPUL should review its human capital rationalization policies in the post-acquisition period in order to ensure that they are able to effectively leverage on their workforce to enhance its financial performance. In addition, EPUL should utilize a wide array of marketing strategies and tools to entrench its brand recognition and expand its insurance products offering so as reach out to the vast uninsured market.