As a result of two agreements signed on Thursday with ZTE (Shenzhen, P.R.C.), a telecom equipment manufacturer, and the government of the Democratic Republic of the Congo, France Telecom-Orange (Paris, France) will acquire 100% of Congo Chine Télécom, a mobile operator in the Democratic Republic of the Congo. France Telecom-Orange will contribute its marketing, commercial and technical expertise, as well as the Orange brand to leverage CCT’s network assets, says the company.
The acquisition will result in two transactions, the first of which Orange will pay $10 million for ZTE’s 50% share of CTT’s equity; and the second in which Orange will pay $7 million to the government of the Democratic Republic of the Congo for its 49% share of CTT’s equity.
According to Orange, the combination of both transactions is consistent with an enterprise value of $196 million for CCT or 2.1 times expected 2011 revenues.
ZTE will provide network equipment and services to CCT as its preferred supplier, and with strategic financing support from China Development Bank (CDB), says Orange.
Furthermore, CCT will pay $71 million to the government of the Democratic Republic of the Congo for improved license terms (10-year extension, access to an additional 2 MHz in the 1,800 MHz range for 2G, and access to 10 MHz in the 2,100 MHz range for 3G) and associated fees, says Orange.
CCT’s operations will be financed from internally generated funds, restructured external loans and a total of $185 million as capital increase provided by France Telecom-Orange in several installments.
According to Orange, this acquisition reflects its international strategy, which aims to stimulate growth by entering high potential emerging markets. With over 70 million inhabitants, the Democratic Republic of the Congo is the fourth most populated African country but has a mobile penetration rate of only 17%, considerably less than many neighboring countries. According to Orange, the development of CCT, which holds a national mobile license and has significant market share in certain regions of the country, offers real potential for growth over the next few years.
"The acquisition of CCT is an important step in our policy of expansion outside Europe, and contributes to our stated aim of doubling our revenues in Africa and the Middle East by 2015,” says Stephane Richard, chairman and CEO France Telecom-Orange.
The final closing of the transactions is expected to take place shortly, according to Orange.