Orange/France Telecom Reach 22.3 mil. African GSM Subscribers

Orange and its parent company, France Telecom, now have GSM subsidiaries in 12 African countries. It counted 10.771 million subscribers in Egypt and 11.141 million in sub-Saharan Africa by 31 December 2007. This represented an increase of 54% compound annual growth rate (CAGR) over the total for Africa as of 31 December 2006 of 14.232 million subscribers, and an increase of 46% CAGR for sub-Saharan Africa over the 7.629 million subscribers over the same period (see sub-Saharan Africa: 26 January 2007: Orange Surpasses 7 mil. African GSM Subscribers at End-2005).

Orange/France Telecom had subsidiaries in nine countries in sub-Saharan Africa at the end of 2006: Botswana, Cameroon, Côte d'Ivoire, Equatorial Guinea, Madagascar, Mali, Mauritius, Réunion, and Senegal. In the last year, it launched operations in three more countries:

• Guinea-Bissau: In January 2007, Sonatel, the fixed-line incumbent of Senegal, which is part of the France Telecom group, was awarded the third mobile licence in the neighbouring West African country of Guinea-Bissau (see Guinea-Bissau: 19 January 2007: Sonatel Wins Mobile Licence in Guinea-Bissau). By 31 December 2007 the operator had 36,000 subscribers.

• Guinea: Sonatel also acquired a mobile licence in Guinea during March 2007, and launched mobile services in Guinea on 5 November under the "Orange" brand (see Guinea: 15 March 2007: Sonatel Acquires Spacetel's Mobile Licence in Guinea). By 31 December 2007 it reported 185,000 subscribers.

• Central African Republic: France Telecom acquired a mobile and internet licence in the Central African Republic in April 2007, and created a new Orange subsidiary that will operate the service (see Central African Republic: 6 April 2007: France Telecom Acquires Mobile/Internet Licence). By 31 December 2007, the operator reported 34,000 subscribers.

Outlook and Implications

France Telecom has targeted further expansion in Asia and Africa. Already it is the fourth-largest African mobile operator behind MTN, Vodacom, and Celtel, but it is set for a period of even more dynamic growth through a combination of organic growth in its well-established African markets and new growth through acquiring both new licences and established operators.

In early 2006, France Telecom's chief executive stated that the company would focus its acquisition efforts on these regions where there is still room for growth, but conceded that there was little room for success in pushing into Latin America. In June 2006, France Telecom's CEO hinted that the company was mulling acquisitions in Africa and Asia (see World: 15 June 2006: France Telecom's New Push in Africa, Asia). Eighteen months later, it has acquired five new operations in sub-Saharan Africa and is pursuing at least two more.

France Telecom notably won a 51% stake in fixed-line incumbent Telkom Kenya with a bid of US$390 million near the end of 2007 (see Kenya: 16 November 2007: France Telecom Consortium Wins 51% Stake in Telkom Kenya). France Telecom has said that it intends to market Telkom Kenya's services under the Orange brand. Although Telkom Kenya's stake in Safaricom was de-linked just prior to the privatisation, the regulator granted Telkom Kenya a mobile licence in September 2007 (see Kenya: 1 October 2007: CCK Issues Notice Granting Telkom Kenya Mobile Licence).

"This transaction fits very strongly with France Telecom's strategy of targeted development in fast-growing markets," said a company press release. "With France Telecom, Telkom Kenya will develop convergent telecommunication services, i.e. mobile, fixed, and internet-based. As mobile penetration is currently lower than 30%, the Kenyan mobile market still offers a high growth potential. France Telecom will benefit from the existing infrastructure of Telkom Kenya to develop and launch its 2.5G network in the short term."

In November 2007, France Telecom won the tender for a "global fixed, mobile, and internet" licence in Niger (see Niger: 23 November 2007: France Telecom Wins Fixed, Mobile and Internet Licence in Niger). "Niger offers good prospects for growth," said France Telecom in a company press release, "with a growing population of around 13 million people, and a mobile penetration rate of under 5%".

Meanwhile, France Telecom has also bid for Ghana Telecom and reportedly expressed an interest in NITEL. Ghana Telecom has a mobile subsidiary One Touch, and NITEL owns the fourth-placed mobile operator M-Tel.

• Ghana Telecom: France Telecom was short-listed with two other bidders for Ghana Telecom, and it seemed in November that it has been selected as the preferred bidder. However, the government said in December that the "offers received so far have not met the expectation of the government" and is holding out for a higher offer (see Ghana: 31 December 2007: Ghanaian Government Rejects Bids for Ghana Telecom).
  
• NITEL: In Nigeria, the fixed-line incumbent NITEL was privatised in 2006 but this week the government said that it was cancelling the deal and was looking for a new core investor. According to Minister of Information and Communications John Odey, France Telecom was among four companies to have expressed an interest in acquiring a stake in NITEL/M-Tel (see Nigeria: 19 February 2008: Nigerian Government Cancels Sale of NITEL, Seeks New Investor).