Orange unveiled plans to acquire three mobile operators in West Africa, boosting its presence on a continent that it sees as vital to its future growth.
The France-based operator has agreed to buy 100 per cent of the shares in Cellcom Liberia from Cellcom Telecommunications through its subsidiary Orange Côte d'Ivoire. In addition, it also finally agreed to buy 100 per cent of Airtel's operations in Burkina Faso and Sierra Leone.
Orange has previously said it was exploring the possibility of buying Airtel's mobile subsidiaries in Burkina Faso, Chad, Congo Brazzaville and Sierra Leone. However, it has now also confirmed that talks on Chad and Congo Brazzaville have lapsed. Airtel Africa operates in 17 markets across Africa in total.
Orange said the acquisitions would enable it to strengthen its position in Africa, which it said is a strategic priority for the group. In its results for the third quarter of 2015, Orange said it had 111.2 million customers in Africa and the Middle East (MEA). Revenue in the region increased by 6.8 per cent year-on-year in the quarter to reach more than €1.3 billion ($1.4 billion).
Once the three new transactions have been completed, Orange will be present in 20 countries on the African continent and 22 in Africa and the Middle East, which it refers to as the AMEA region.
Few details were provided about the Liberia acquisition, but Orange said the operations in Burkina Faso and Sierra Leone have a combined revenue of around €275 million and would add almost 5.5 million customers to its customer base. The purchase price will be based on the financials of Airtel's two subsidiaries for the year ended Mar. 31, 2016 and will represent the equivalent of 7.9 times Airtel's EBITDA in these two countries at this time.
In general, Orange has repeatedly emphasised that it sees the MEA region as key to its future growth. The company's policy is also to sell units in countries where it believes it would be unable to become the number one or number two on the market over time. That policy saw it divest its entire 70 per cent stake in Telkom Kenya to Helios Investment Partners last November. In 2014, it also completed the sale of Orange Uganda.
In July last year, Orange CFO Ramon Fernandez said the company was targeting annual revenue growth of around 5 per cent in Africa and the Middle East by 2018 and was looking for further opportunities to expand in the region.
Meanwhile Orange is also investigating a potential consolidation in France and recently confirmed it is in talks on a possible merger with Bouygues Telecom. Orange CEO Stephane Richard has nonetheless made it clear that any merger would have to add value for the company and drive investments in France's telecoms sector.
"I will not engage Orange in a risky deal," Richard said, according to Reuters.
For more:
- see this Orange release on Liberia
- see this Orange release on the Airtel units
- see this Reuters article
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