France Telecom is set to acquire 100% of Congo Chine Télécom (CCT), a mobile operator in the Democratic Republic of Congo, for $17 million.
The development came after France Telecom signed agreements with CCT’s two owners, ZTE and the government of DRC, late last week.
France Telecom will pay $10 million for ZTE’s 51% share of CCT’s equity, and $7 million for DRC government’s 49% share of CCT.
France Telecom added that the combination of both transactions is consistent with an enterprise value of $196 million for CCT, or 2.1 times expected 2011 revenues.
France Telecom said that it will contribute its marketing, commercial and technical expertise, as well as the Orange brand, to leverage CCT’s “solid network assets”.
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).
CCT will pay $71 million to the government of DRC for improved licence terms, consisting of a 10-year extension, access to an additional 2 MHz in the 1,800 MHz range for 2G services, and access to 10 MHz in the 2,100 MHz range for 3G services.
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 in several installments.
France Telecom said that acquisition reflects its international strategy, which aims to “stimulate growth” by entering high potential emerging markets.
DRC has a population of about 70 million people, making it the fourth most populated African country, but has a mobile penetration rate of only 17%.
Stephane Richard, CEO, France Telecom, 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.”