Africa - Orascom acquires Telcel

Orascom Acquires Telecel Centrafrique, Explores Other African Opportunities

Telecel Globe, the newly created subsidiary of Orascom Telecom, has acquired Telecel Centrafrique.

Significance - Telecel Globe finalised the acquisition of both U-Com Burundi and Telecel Centrafrique during July 2008, paying US$106 million for both.

Implications - Orascom once owned 13 GSM operations in sub-Saharan Africa, including Centrafrique.

Outlook - These acquisitions are part of Telecel Globe's strategy to target licences and mobile operators in small and medium-sized developing countries that have high growth potential.


During May 2008 Orascom created a new subsidiary, Telecel Globe, to look into small-sized acquisitions in Asia and Africa, according to Dow Jones. The plan was to bid for new mobile licences that would become available in the region during the year and the operator planned to enter up to six African countries within 12 months. Telecel Globe has already assumed operational management of Telecel Zimbabwe, which was owned by Orascom (see below). According to one report, the operator also acquired a company in Namibia during 2008 and is exploring opportunities in Mali and Equatorial Guinea. By 30 September 2008, U-Com Burundi, Telecel Centrafrique and Telecel Zimbabwe reported a total of 603,088 subscribers.

U-Com Burundi: Telecel Globe bought the leading mobile operator in Burundi from Indian company Global Vision Ltd. The acquisition will officially close in January 2009. U-Com Burundi operates GSM 900/1800, CDMA 800 and WIMAX networks in Bujumbura (the capital of Burundi). U-Com is the largest operator in the country, reporting 246,000 subscribers by 30 September 2008 and a market share of 70%. It plans to double its subscriber base to 555,000 by 2010, according to Reuters.
Telecel Centrafrique: Telecel Centrafrique operates a GSM 900/1800 network and is the largest operator in the Central African Republic, according to Orascom’s third-quarter 2008 results, with over 113,000 subscribers and a 37% market share. The Central African Republic has a population of 4.4 million, of which 55% is between the age of 15 and 64 years, and had a mobile penetration of 6.2% at the end of 2007. ARPU for U-Com and Telecel RCA is US$9.2 and US$15.6 respectively. Orascom sold Telecel Centrafrique to the Gloria Trust, a previous minority shareholder in Telecel International, in May 2003 (see below).
Telecel Zimbabwe. Telecel Zimbabwe was the last of Orascom’s operations in sub-Saharan Africa, which it was unable to sell and has remained under Orascom's management. The operator reported 244,088 subscribers by the end of September 2008, a 5% increase on the 232,781 subscribers of the previous year, but slightly lower than the 245,176 subscribers reported by the operator at the end of June 2008.
Outlook and Implications

Through its February 2000 acquisition of an 80% stake in Telecel, Orascom once had the largest footprint of all mobile operators in sub-Saharan Africa with operations in Benin, Burkina Faso, Burundi, the Central African Republic, Chad, Congo-Brazzaville, Côte d'Ivoire, the Democratic Republic of Congo, Gabon, Togo, Uganda, Zambia and Zimbabwe. However, the operator restructured to focus on the larger, more lucrative markets of North Africa and the Middle East, broke up Telecel and succeeded in selling off all but one (Zimbabwe) of its subsidiaries in the region. Five years after selling off its empire of mobile operators in sub-Saharan Africa, the chairman of Egyptian operator Orascom Telecom, Naguib Sawiris, said in September 2008, "We believe that within the next 12 months we could add up to six more countries, all in Africa."

Orascom had approximately 79.3 million customers in six countries by the end of September 2008—Algeria, Bangladesh, Egypt, Pakistan, Tunisia, and Zimbabwe—a 22% increase from 64.7 million in the previous year. The operator looked for new expansion into the Middle East during 2007, but struggled to match the financial strength of other major Middle Eastern operators, which consistently outbid and won the available licences. Rival Middle Eastern operators, including Etisalat, Warid Telecom and Zain, have expanded dramatically into sub-Saharan Africa, even acquiring some of Orascom's former assets. In May 2008, Orascom then created Telecel Globe to look into small-sized acquisitions in Asia and Africa. The plan is to bid for new mobile licences that will become available in the region during the year. However, the target of six more countries within a year hints at the potential acquisition of a smaller operator that could scoop this many countries in one go.