Orange looks to acquire South Africa’s Cell C, enter Nigerian market

Orange

French telecommunication giant, Orange said it is looking at entering the Nigerian and South African market as soon as it can get it done.

Orange’s CEO told Los Echos newspaper that:

“It could make sense to be in economies such as Nigeria and South Africa,” Stephane Richard said, according to a Reuters report. “If one considers there are things to do, the time frame I am considering is rather a few months than a few years.”

“It would be a surprise if they were not looking for new ways to enter these markets, rather than the fact that they are considering it,” Arthur Goldstuck, technology analyst at World Wide Worx told Business Insider of South Africa.

People familiar with the matter said Orange could be looking at the shortest period of time. To execute either of the plans.

“One option for any major global player coming into this market is the potential availability of Cell C for acquisition,” says Goldstuck. “The company is being brought onto an even keel from an operational point of view, and becoming more viable to integrate into larger organisations operating globally.”

“Orange was speaking to Cell C in the past, when Oger was looking for a buyer. But the price was just too high,” says Dobek Pater, telecommunications analyst at Africa Analysis.

“Orange is already a big player in Africa,” says Pater. “But If you want to be a continental player, then there are a handful of markets you need to be in – one of them is South Africa.”

“The fastest way of entering SA market would be through Cell C,” he says. Cell C has been struggling with its debt in recent years and, earlier this year, defaulted on a R2,7 billion loan that was due at the end of December.

“I think the asking price would be much lower because of the debt, says Pater. And, frankly, I think Blue Label Telecoms is tired of operating it.” Blue Label is the largest shareholder in Cell C, and wrote down its interest in the company in May last year.

“There is a parallel for using such presence as a springboard to moving aggressively into this market,” says Goldstuck “Amazon Web Services initially opened points of presence in the same cities, then expanded that to physical infrastructure, and last month opened their first data centres on the African continent, in Cape Town.”

“They’ve certainly got a history of trying to enter South Africa,” says Pater of Orange. “It would be a strategic move for them. They’re already in Botswana and Madagascar.”

Nigeria’s Africa’s largest telecoms market with over 140 million subscribers, South Africa’s MTN Group Limited has majority of the market share but it has come under pressure as the market focuses on data as a major revenue driver.