Orange yesterday reaffirmed ambitions to grow its presence across Africa and the Middle East via acquisition, as the company established a separate holding company for its operations in the regions, effective from this month.
The move, which has been mooted for over year, will see Orange launch a holding company for all its assets in both regions under a single legal framework. Orange operates in 19 countries across Africa and the Middle East and said it has ambitions to grow revenue by approximately 5 per cent every year through to 2018. It also aims to increase operating profit faster than sales growth.
Speaking at Orange’s Africa and Middle East event in London, deputy CEO and CFO Ramon Fernandez (pictured) added that the separate entity could potentially be used to attract new investors and strategic partners to team up with Orange. Most recently, the company said it was looking for investors in Egypt, while planning to increase its stake in Morocco’s Meditel.
“We do a lot in both regions, so we wanted to create a clearer means of communication,” he said. “Now you can access our revenue and EBITDA performance specific to this part of the world. We could use it to work on strategic partners and develop our activities here, which we believe will be popular. When you look around, there is not a lot of scope for international companies to invest in Africa and this could be a way in.”
Fernandez refuted claims that setting up the separate entity could be a way for Orange to eventually exit the region, stating that the move “reaffirms more than ever the company’s commitment to grow in both regions”.
He however remains more open to potential flotation in the future, stating that “we could look at a listing at some point. We are creating conditions for opportunities as they arise”.
Orange has “open mind” over acquisitions
Orange revealed its Africa and Middle East unit is presently the group’s most profitable, with a 33 per cent average increase in revenue, compared to 31 per cent in other regions.
It added that its strategy for Europe is based around convergence, which was reaffirmed by its proposed acquisition of Spain’s Jazztel. Fernandez also said it was not looking to expand anywhere else, apart from its three core markets.
“We are not trying to be an operator in Asia, Latin America or North America. We are an operator in Europe, Africa and the Middle East and that’s where we want to be.”
In Africa and the Middle East, Fernandez said the company was looking at possible acquisition targets to grow its presence, and did not rule out a move for Airtel’s assets in Africa, where the Indian company is rumoured to be looking to exit.
“We know we can build,” he said. When you look at our track record, coupled with our existing presence, we are in a position to add assets if we find them at the right price. We will focus to look at potential opportunities and we have an open mind over the potential that exists.”