Airtel to sell 2 African units to France’s Orange

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NEW DELHI: Sunil Mittal’s Bharti Airtel will sell its mobile operations in two countries in Africa – Burkina Faso and Sierra Leone – to France’s Orange as it looks to turn around its operations in the continent.
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Airtel had in July last year entered into an agreement with Orange to sell four subsidiaries, but could finalize a deal for only two. Talks for an agreement for Chad and Congo Brazzaville have lapsed, the company said.
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“Orange and Bharti Airtel International (Netherlands) BV have signed an agreement, leading to Orange’s acquisition of Airtel’s operations in Burkina Faso and Sierra Leone,” Airtel said. According to the agreement, Orange will acquire 100% of the two companies’ share capital. The consolidated revenue of the two companies is around 275 million euros. “These acquisitions will be implemented in partnership with Orange’s subsidiaries in the Cote d’Ivoire and Senegal,” the company said.
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Airtel had entered Africa in 2010 by acquiring the assets of Zain Telecom for about $10 billion, but has been struggling to run operations in the region at a time when it also needs cash to service a huge debt while also investing in new technologies like 4G in India.
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The company, which has around 80 million customers in the region, has been looking at deals to exit some of the markets, while also selling tower assets to free up cash in order to service the debt. Airtel said that the outlay for Orange for these transactions will be based on the financials of its two subsidiaries for the year ended March 31, 2016 and will represent the equivalent of 7.9 times Airtel’s ebitda in the two countries.
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M & A deals would be the order of the day.
Ravishankar Bhujanga
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The completion of these transactions remains subject to approval by the competent authorities. “Through this deal, Orange will reinforce its presence in Africa with two additional countries, adding almost 5.5 million customers to its mobile customer base. This acquisition marks a step forward in Orange’s growth strategy and will bring the Group’s African footprint up to 20 countries in 2016,” the company said.
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Orange is one of the world’s leading telecommunications operators with sales of 39-billion euros in 2014. It is present in 28 countries and the group has a total user base of 263 million customers worldwide.
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Lazard and Societe Generale were advisers to Orange for this transaction. Airtel was advised by Arma Partners LLP.

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