[/blockquote]Orange and Bharti Airtel International have signed an agreement leading to Orange’s acquisition of Airtel’s operations in Burkina Faso and Sierra Leone. The French based telecommunication company will acquire 100% of the two companies’ share capital of the two Francophone countries. The consolidated revenue of the two companies is around 275 million euros. These acquisitions will be implemented in partnership with Orange’s subsidiaries in the Côte d’Ivoire and Senegal. This comes at a time when the company’s African division struggles to survive in the harsh telecom environment in Africa.
From last year’s financials, Africa continued to set-back Airtel’s performance with the unit’s net loss widening to $154 million from $137 million a year earlier. This was mainly attributed to currency depreciation and changes in interconnect rates in the key Nigerian market impacted consolidated financials.
The outlay for Orange for these transactions will be based on the financials of Airtel’s two subsidiaries for the year ended March 31, 2016 and will represent the equivalent of 7.9 times Airtel’s EBITDA in these two countries at this time. The completion of these transactions remains subject to approval by the competent authorities.
Orange’s international development strategy, involves acquiring shares in telecos of more french speaking countries placing a priority on accelerating growth in high-potential, emerging markets where the Group is not already present. It should be recalled that Orange recently pulled out of Kenya’s telecom sector. Through this deal with Airtel, Orange will reinforce its presence in Africa with two additional countries, adding almost 5.5 million customers to its mobile customer base. This acquisition marks an important step forward in Orange’s dynamic growth strategy and will bring the Group’s African footprint up to 20 countries in 2016.
This is further to the initial agreement signed between Airtel and Orange in July 2015 regarding the potential acquisition of Airtel’s operations in Burkina Faso, Sierra Leone, Chad and Congo Brazzaville. The agreements regarding potential transactions in the remaining two countries have lapsed.
Just like in the sale of Orange Uganda in 2014, Lazard and Société Générale were advisors to Orange for this transaction. Airtel was advised by Arma Partners LLP. This comes at a time when Tigo was last year rumored to be in talks with Airtel Uganda for potential acquisition.