MTN-Orascom: What exactly is for sale?
Wirelessfederation is detailing today what the MTN-Orascom deal means in terms of markets involved in the deal and business contribution per market. If you found our previous post related to Orascom’s internacionalization strategy interesting, you’ll appreciate this update.
A lot of activity and news has been generated around the MTN-Orascom deal which is said to be in the offing. One of the key things to note, which MTN has experienced over the last 3 attempts (Twice with Bharti and once with Reliance) that a deal could be close and yet quite far. That said, if a deal were to happen, here’s a quick analysis of whats for sale in the Orascom portfolio and why 2 assets are particularly interesting:
1. Djezzy in Algeria: Top line of $1.86 billion with a 46% market share (14.6 million subs) and a 57% EBITDA margin! This is the crown’s jewel. However, there is a downside here as well for some key reasons. Orascom’s relationship with the government and the regulator is strained and Q4 2009 results suffered on account of backdated taxes and penalties. Djezzy has actually seen market share decline by 5 percent and ARPU declined by 16% in 2009. Mobile penetration is in excess of 90% and Q-tel owned Njedma has proven to be an aggressive competitor. Numbers are big and exciting but the hay-days might just be getting over pretty soon though.
2. Tunisiana in Tunisia: Orascom owns half of Tunisiana alongside it’s arch rival in Algeria, Q-Tel (Wataniya) which owns the remaining 50 percent. With 53 percent market share (5.2 million subs) and 54% EBITDA margin this is another rock and roll story. However, with Orange launching and that too with an exclusive 3G license, pressures will build up sooner rather than later.
3. CellOne Namibia, Telecel Zimbabwe, Telecel Central African Republic & U-com Burundi together have 1.8 million subscribers and contribute only $81 million to the top line. Advantage MTN: With the 2 key markets facing pressure, MTN is very well positioned to make the most of the situation and ensure that margins are intact or could even be expanded if it plays out its cards right with what it knows best about innovative and dynamic pricing, mobile money and fantastic Value added services. Understandably Q-Tel and Orange need to watch this space closely.
Orascom is not interested in selling Mobinil and MTN is not interested in Orascom’s mobile businesses in Canada, Pakistan, Bangladesh and North Korea. Nor does it want Orascom’s minority stake in ECMS, Egypt’s leading mobile operator. No deal structure had been finalised between MTN and Orascom… yet.
Enjoy the reading. Best, CVA