Having demonstrated its intent to expand into emerging markets with its failed attempt to acquire TeliaSonera, France Telecom Orange has narrowed its focus and is now targeting Africa and the Middle East under a five-year drive to double revenues from emerging markets.
The company CEO, Stephane Richard, has confirmed that he wants to boost revenues from emerging markets, which currently account for only 7 per cent of France Telecom's total, or about €3.3 billion. "If we can buy a portfolio of assets to arrive more rapidly, that's very good. If it's necessary to buy licences country by country, that works also. Therefore we have about five or six billion euros, or even seven billion euros that could be invested."
Richard said that he expected to have to pay 2.5 to three times revenues for most acquisitions in the area, similar to the Bharti-Zain deal. India's Bharti Airtel last month agreed to buy the African operations of Zain of Kuwait, which span 15 countries, for US$10.7 billion. The agreement followed two failed attempts by the Indian group to buy MTN, South Africa's biggest mobile operator.
The CEO admitted that France Telecom was "certain" to look at any former Zain assets that Bharti might want to offload, but said that the deal between Zain and Bharti had only just been agreed.
The company has confirmed that it would like to concentrate on West Africa because it is largely French speaking and already a strong region for Orange, which has operations in Cameroon, Senegal and Niger. "All of the countries in this zone where we aren't at present interest us," Richard said. "There's logic in having a regional cluster."
Commenting on the report, Frédéric Doussard, an analyst at Oddo Securities, said: "It is a little bit more aggressive than I had expected, but it is in line with what he has said in roadshows. It makes sense as a strategy, as long as the prices remain reasonable."
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