France Telecom Buys Congolese Operator

France Telecom-Orange to acquire 100% of Congo Chine Télécom

October 21, 2011

2 Min Read

PARIS -- As a result of two agreements signed today respectively with ZTE, a Chinese telecoms equipment manufacturer, and with the government of the Democratic Republic of the Congo, France Telecom-Orange 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 solid network assets.

This acquisition will result from two transactions:

1) Under the terms of a share purchase agreement signed with ZTE, France Telecom-Orange will pay $10m (7 million euros) for ZTE’s 51% share of CCT’s equity.

2) 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.

Orange (NYSE: FTE)

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