Orange’s (EPA:ORA) decision to separate its Middle East and Africa businesses into a separate legal entity will give it greater M&A flexibility, top executives have said.
The French giant will at the end of Q2 report results along regional lines for…
Orange‘s (EPA:ORA) decision to separate its Middle East and Africa businesses into a separate legal entity will give it greater M&A flexibility, top executives have said.
The French giant will at the end of Q2 report results along regional lines for the first time, a spokesperson added.
Speaking at a press conference in London, CFO Ramon Fernandez and Marc Rennard, who heads up the region, said possibilities could include mergers, acquisitions, partnerships and possible sales.
The company is open to talks, Fernandez said, emphasising however: “We are not looking at Africa as a place to be less present in. Africa is our core business.”
This comes as a number of overseas operators reconsider their position on the continent.
Bharti, Vodafone and Etisalat, as well as smaller players such as Brazil’s Oi (which inherited assets on the continent owned by Portugal Telecom in partnership with Helios) and Millicom would also “listen to offers”, say experts.
That said, all the companies face regulatory barriers since each country has its own regime, and also transparency issues in some countries.
“For someone with money, and a willingness and ability to operate in telecoms, it’s a good time to buy,” said one London-based lawyer. That said, apart from continental champion MTN, “there are not many parties in a position to consolidate. Furthermore, it’s unclear what governments and regulators will allow – the predictability that is beginning to emerge in Europe has not arrived in Africa”.
Those that could emerge as potential buyers include two telecoms-focused billionaires: Angola’s Isabel dos Santos, who owns majority stakes in Portugal’s Nos and Angola’s Unitel, and Zimbabwean Strive Masiyiwa, the founder and chairman of Econet Wireless and Liquid Telecom. A contender for smaller assets is Lebanese-owned Africell, which in December announced it was seeking private equity investment from Providence, Carlyle and Providence.
US telcos AT&T and Verizon have shown some interest in Africa – but would have to adhere to anti-corruption requirements – while Asian buyers such as Softbank, Viettel and Chinese leaders could also take a look, experts have said.
Orange has held discussions with Bharti about possible asset swaps along linguistic lines, sources have previously told TelecomFinance.
Declining to comment on talks with Bharti, regional head Rennard reportedly said that acquisitions would likely be contiguous to its mainly Francophone markets.
Bharti‘s Francophone assets include Burkina Faso, the Democratic Republic of Congo, Gabon, Republic of the Congo and Chad, while Orange’s Anglophone markets include Botswana and Kenya.
Orange is present in 19 Africa and Middle East markets, and in 15 of them has a number one or number two position, the company says. The region’s FY revenue rose 7% to €4.3bn between 2013 and 2014.
The telco says its regional growth engines include a push to increase smartphone and data usage, B2B activities and Orange money. It also announced that the ACE undersea cable, in which it is an investor, has landed in Benin and the Canary Islands, and plans to support start-ups in 13 regional markets.
