France Telecom SA (FTE) is close to an agreement to purchase Congo China Telecom, the fourth-largest mobile operator in the Democratic Republic of Congo, according to two people with knowledge of the matter.
The deal could be announced as early as this week and may value the company, which is jointly owned by China’s ZTE Corp. (763) and the Congolese government, at about 160 million euros ($218 million) including debt, one of the people said. Both declined to be identified because the talks are private.
France Telecom, the country’s largest phone company, is scouring Africa and the Middle East for potential acquisitions, including in some of the region’s poorest and most unstable countries, as it aims to offset slowing growth in its domestic market. In March, the Paris-based company agreed to pay $245 million for a 20 percent stake in Iraqi operator Korek Telecom, and last year bought 40 percent of Morocco’s Meditel for 640 million euros.
France Telecom declined to comment. Spokeswomen for ZTE in Shenzhen, China and in the U.K. did not immediately return calls seeking comment.
ZTE currently owns 51 percent of CCT, with the government holding the rest. The government stake is being sold as part of a broader effort to divest assets and transform some state-owned enterprises into limited-liability companies.
While France Telecom has extensive experience in Africa, where it operates in countries including Cameroon and the Ivory Coast, Congo may present special challenges. The country of 65 million is still recovering from more than 40 years of dictatorship and war, and its residents’ annual per-capita income is about $300, according to the CIA World Factbook.
Africa Expansion
France Telecom’s emerging-market assets are taking on a larger share of revenue as economic growth in those countries outpaces that of Europe. Sales in the Middle East and Africa, excluding Egypt and the Ivory Coast, climbed 7.9 percent in the second quarter. Domestic revenue from France, which contributed to half of the group’s total, fell 2.3 percent to 5.7 billion euros.
The company set a target last year to double its overall emerging-market revenue by 2015, from about 3.3 billion euros in 2009.
To contact the reporters on this story: Jacqueline Simmons at jackiem@bloomberg.net; Matthew Campbell in Paris at mcampbell39@bloomberg.net.
To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net
Source:bloomberg