Orange to acquire 4 Airtel affiliates in Francophone Africa

Orange and Airtel have entered into an exclusive agreement to explore the possible acquisition by Orange of Airtel’s subsidiaries in Burkina Faso, Chad, Congo Brazzaville and Sierra Leone.

The five countries represent all Francophone countries, or non-English speaking markets in Africa in which Airtel is in where the company has been making losses since its entry in 2010 which has been dragging the carrier’s consolidated financials.

Airtel Burkina Faso is the dominant player with 1,433,000 customers representing 50 per cent market share while Airtel Chad is the dominant operator in Chad with 69 per cent of the market. Airtel Congo is also the market leader with a 55 per cent market share in Congo Brazaville.The move by Airtel and Orange comes at a time when reports say that Orange is keen in the Francophone operations of Bharti, and not the East African ones. Reports also show that Bharti has been performing well in the Francophone countries even though there have been claims that Airtel management has been trying to replicate its India strategy of low tariffs and high volumes for the debacle in Africa.

However, the statement added that these were only negotiations and there was “no certainty” of any binding agreement as a result of these discussions. It didn’t provide any further details. Africa has long been a drag on Bharti’s overall performance, often offsetting the healthy growth numbers the company registered in its Indian operations.

According to Economic Times, Airtel is looking for a valuation between US $900 million and US $1 billion for the sale. The four countries in question roughly contributed about US $ 650 – 660 million to Airtel Africa’s top line of US $4.71 billion as of Marchend. Earnings before interest, taxes, depreciation & amortization (EBITDA) for the four countries was close to US $180 million in the period.

Airtel’s net loss in Africa for the fiscal fourth quarter of the year ended March 2015 widened to US $183 million from US $105 million a year back, hurt by forex losses.

The company’s Africa revenue had dropped by 12.6 per cent in the quarter ended March 2015 over last year to US $1 billion, from US $1.14 billion in the same quarter last year. The growth was limited by currency depreciation of 18.4 per cent, in reported currency terms. The company has 76.3 million subscribers in Africa that grew 9.8 per cent year on year.

Airtel had purchased Kuwait-based Zain Telecom’s African operations across 17 countries for US $10.7 billion.