French telecommunications company, Orange S.A, is set to expand its footprints in Africa following the acquisition of Bharti Airtel’s subsidiaries in Burkina Faso and Sierra Leone in an acquisition estimated to be worth $800-$900 million. This comes two days after Orange S.A acquired Cellcom Telecommunications; Liberia’s leading mobile operator.
Here are four things you need to know about the acquisition.
Orange S.A is going to grow its subscriber base. A lot.
The acquisition sees Orange gain about 100 percent of the two companies share capital from Bharti Airtel International (Netherlands) BV with the consolidated revenue of both companies coming to a total of around $297million. Furthermore, Orange will get almost 5.5 million subscribers to its network already established across West, East and Central Africa.
The acquisition strengthens Orange S.A’s position in Africa.
Orange’s international development strategy has intensified following this acquisition. With an established presence in other African countries including Cameroon, the Central African Republic, the Democratic Republic of the Congo and Niger, this acquisition will see Orange expand to a total of 20 African countries this year. Orange S.A’s plan to extend its investment by 20 percent in African and a Middle Eastern market by 2018 is in view.
3. Bharti Airtel’s operation in Africa has recorded minimal success
Bharti Airtel cannot boast of 100 million subscribers up from 42 million at the time of acquisition. Bharti Africa has recorded a net loss of $585 million on revenue of $4.2 billion from its African operations. Having raised as much as $9million in debt for the africa purchase in 2010, Bharti had a net debt of $8.4 billion as at 31st March 2015 coupled with a fall in shares by 2.3 percent to Rs 308.15
4. The scramble for more subscribers in Africa
Orange S.A will face competition from South Africa’s MTN, Vodafone Group Plc, Africa’s telecom giant; Vodacom which operates in over 40 African countries shares a similar development strategy to Orange- to hold the biggest share of the market.