France Telecom Buys Amena

France Telecom acquires 80% stake in Spanish mobile operator Amena for €6.4B

July 27, 2005

3 Min Read

PARIS -- Creation of a first tier operator in Spain with the merger of the Number 3 mobile operator and the Number 2 ADSL operator

  • Strengthening the position of the Group in Spain, fifth European market with an estimated growth potential between 2005 and 2008 of approximately 6% for mobile and more than 10% for data and internet.

  • More than 11.8 million customers in Spain foreseen for the end of 2005: projected 2005 revenues of 4.1 billion euros and gross operating margin close to 1.2 billion euros on a pro forma basis.

  • 9.7 million mobile customers with 24% market share at the end of June 2005, 2 million fixed line and internet customers of which 526,000 ADSL lines with 16% ADSL market share.

A major step in the roll-out of the NExT strategy: acceleration of the implementation of our strategy of an integrated European operator

  • A transaction, which puts France Telecom in a position to offer convergent broadband and mobile services in a key European market with close to 10 million additional customers.

  • A transaction, which balances out the Group's asset portfolio in Europe.

A transaction in accordance with the cash utilization criteria defined in the NExT plan

  • The acquisition should create value for the shareholders of France Telecom.

  • Acquisition of 80% of Amena for 6.4 billion euros.

  • 8.9 billion euros of assets, for a multiple of gross operating margin of 7.8x to 8.0x for 2005 and more than 1.7 billion Euros of tax assets, for an Enterprise Value of Amena (on a 100% basis) at 10.6 billion Euros.

  • The transaction will be paid in cash and will be refinanced in shares for 3.0 billion euros through a capital increase reserved for and subscribed to by the vendors or through a public offering of shares to be preferably subscribed by its shareholders.

  • The transaction is expected to be accretive in free cash flow per share and net income per share before amortization of goodwill after twelve months.

  • Objectives: ratio of net debt / gross operating margin for year-end 2005 and year-end 2008 are expected to be maintained, as is the objective of dividend distribution for 2006.

France Telecom announced today that its subsidiary Orange S.A. has executed an agreement to acquire 80% of the shares of Auna Operadora de Telecommunicaciones S.A. ("Auna") owner of 97.9% of Retevision Movil S.A., a mobile operator under the tradename "Amena". This operation will be definitely closed after the prior separation of the cable activities of Auna (Auna Tlc). France Telecom will thereafter proceed to merge Auna, Retevision Movil S.A. and France Telecom España (which holds the fixed and internet business of the group in Spain under the Wanadoo brand). Following the completion of the merger, France Telecom will retain approximately 75%-80% of the new merged entity. The balance (between 20%-25%) of the shares will be held by Santander, Union Fenosa and Endesa as well as by the minority shareholders wishing to keep their participation among which certain Spanish savings banks.

Didier Lombard stated:

"I am pleased to announce today, together with our Spanish partners, the creation of a first tier challenger in Spain to offer convergent services to our clients, both individuals and enterprises. Spain will be an active platform for the launching of innovative services and will benefit from the strength of the Group at the European level.

The acquisition of Amena comes less than a month after the launch of NExT. It provides a significant contribution to our program for development and growth in Europe. Further to an exhaustive study of the situation by our directors over the past few weeks, France Telecom is seizing this opportunity at a time when the mobile business of Auna can be purchased separately. The transaction complies with our undertakings to the market and has unfolded favorably for the Group. The merger of France Telecom España and Amena confirms our strategy as an integrated European operator and allows us to accelerate the implementation of the NExT plan."

France Telecom SA

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