Paris: France Telecom's 640 million euro (Dh3.14 billion) purchase of 40 per cent of Morocco's Medi Telecom gives the company a foothold in another fast-growing African market — albeit for a price.
The acquisition announced yesterday values Morocco's second-largest mobile operator, better known as Meditel, at 11.5 times its 2009 earnings before interest, taxes, depreciation, and amortisation, according to Societe Generale analysts including Thierry Cota. The "very high multiple" being paid will nonetheless give it exposure to a politically stable emerging market without too much risk, they said in a note.
France Telecom Chief Executive Officer Stephane Richard is re-orienting the company toward Africa and the Middle East, where he has pledged to spend as much as seven billion euros as part of a plan to double emerging-market revenue.
Weighing options
The head of the company's African operations said in June that France Telecom was weighing "four or five" acquisitions in the region.
"Its proximity linguistically, its economic growth and its political stability make Morocco a natural target," CM-CIC Securities analyst Benjamin Rousseau said in a note.
"France Telecom could use Meditel but also the expertise and influence of Morocco in the region as a springboard."
In doing so, France Tele-com would mimic the strategy of domestic rival Vivendi SA, which has used its Maroc Telecom unit to expand into nearby countries including Mali and Burkina Faso.
That operator will also be the stiffest local competition for Meditel, which has a 37 per cent market share in Morocco.
