France’s Orange (EPA:ORA) is in talks to buy four of India-based Bharti Airtel’s (NSE: BHARTIARTL) Francophone African subsidiaries, the companies announced late yesterday.
The two “have entered into an exclusive agreement to explore the…
France’s Orange (EPA:ORA) is in talks to buy four of India-based Bharti Airtel’s (NSE: BHARTIARTL) Francophone African subsidiaries, the companies announced late yesterday.
The two “have entered into an exclusive agreement to explore the possible acquisition” by Orange of Airtel’s businesses in Burkina Faso, Chad, Congo Brazzaville and Sierra Leone, they said, cautioning that there was no certainty of a binding agreement.
Industry observers have for months noted rumoured talks between the two companies over a possible larger consolidation play or a reshuffling of assets along cultural and linguistic lines.
Not part of the deal are Bharti’s other Francophone businesses: the DRC and Gabon, while Orange still holds Anglophone sub-Saharan assets in Botswana and Kenya.
Bharti last month announced that its sale-and-leaseback agreements with independent towerco Helios Towers Africa in Chad and Tanzania had “lapsed and therefore stand terminated”. It did say, though, that it had closed tower deals in five of its 13 African markets.
This month, Orange reiterated its commitment to its Middle East & Africa portfolio, which has become a separate legal entity. The new structure would make it easier to carry out M&A, partnerships and possible sales, said CFO Ramon Fernandez and region head Marc Rennard.
The company will report results along regional lines for the first time at its Q2 announcement on 28 July.
Start of continental M&A wave
Assuming the talks are successful, a deal could prove a catalyst for larger scale African M&A.
Debt-laden Bharti could potentially decide to exit its remaining nine African markets. Vodafone’s directly held and 65% owned Vodacom assets could come onto the market depending on the outcome of European tie-up talks with Liberty Global. Etisalat, which sold most of its sub-Saharan assets to Maroc Telecom and agreed to sell Tanzania’s Zantel to Millicom, could sell further assets such as Sudan.
Other assets on the block include the legacy Portugal Telecom Lusophone businesses inherited by Oi. Millicom, for its part, is open to further in-country consolidation, CEO Mauricio Ramos told TelecomFinance.
