This acquisition will result from two transactions:
- Under the terms of a share purchase agreement signed with ZTE, France Telecom-Orange will pay $10m (about UGX. 19.7bn) for ZTE’s 51% share of CCT’s equity.
- Under the terms of a share purchase agreement signed with the government of the Democratic Republic of the Congo following a call for tenders, France Telecom-Orange will pay $7m (5 million euros) for the government’s 49% share of CCT’s equity.
The combination of both transactions is consistent with an enterprise value of $196m (143 million euros) for CCT or 2.1 times expected 2011 revenues.In addition, ZTE will provide network equipment and services to CCT as its preferred supplier, and with strategic financing support from China Development Bank (CDB).
Furthermore, CCT will pay $71m (52 million euros) to the government of the Democratic Republic of the Congo for improved licence 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.CCT’s operations will be financed from internally generated funds, restructured external loans and a total of $185m (134 million euros) as capital increase provided by France Telecom-Orange in several installments.
The operation reflects France Telecom-Orange’s international strategy, which aims to stimulate growth by entering high potential emerging markets. Today’s announcement will enable the Group to strengthen its position in Africa. 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 neighbouring countries. The development of CCT, which holds a national mobile licence and has significant market share in certain regions of the country, offers real potential for growth over the next few years.
Stephane Richard, France Telecom-Orange’s Chairman and CEO, said: “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. Orange is already present in over 20 countries in the region and has built up considerable experience developing networks and new services that are specifically tailored to the needs of local markets. I am delighted that France Telecom-Orange will be in a position to provide our most innovative offers to the residential and business communities in the Democratic Republic of the Congo, a promising economy endowed with vast natural resources.
“The final closing of the transactions is expected to take place very shortly.