Orange, the largest telecommunication operator in France, is exploring different entry options into the Nigerian market, particularly merger and acquisition, BusinessDay can report.
The company had in June said it was considering entering the Nigerian and South African telecommunication sectors as a player and would give itself a few months to make a possible move.
“It could make sense to be in economies such as Nigeria and South Africa. If one considers there are things to do, the time frame I’m considering is rather a few months than a few years,” Stephane Richard, CEO of the company had said.
The plan aligns with its Engage 2025 plan which is a multi-services strategy aimed at diversifying their operation to represent 20 percent of the business at the end of 2025. Among its ambitions is to make Orange the reference digital operator in Africa and the Middle East by 2025.
“Regarding Nigeria, Orange is open to opportunities in some of the big African markets where we do not have any retail presence yet. However, please note that there is no specific project on the table currently. For your reference, I would remind you that we are a contender for the upcoming tender in Ethiopia,” an Orange spokesperson told BusinessDay via email.
Orange has been investing $1.1 billion yearly in the Middle East and Africa region as part of its Engage Plan program.
Orange’s interest in Nigeria has been an open secret since 2017 when it tried to get into the market by acquiring Etisalat Nigeria. When Etisalat Nigeria was struggling financially in 2017, Orange was reportedly in negotiations to pick up a 65 percent stake in the company. Although it later withdrew from the deal when it became obvious another company, Teleology, was the favorite for the 9Mobile deal, Orange has since established some foothold in the country.
Olusola Teniola, President of Association of Telecommunications Companies of Nigeria (ATCON), told BusinessDay that Orange have already established mutually beneficial relationship with two members of his association. ATCON has about 107 members.
Orange’s entry strategy into the Nigerian telecom sector would likely be from its established network which is also similar to its strategies for other markets it operates in Africa. As of 2019, Orange had a presence in 18 countries in Africa and the Middle East where it had 125 million customers on 30 October. With sales revenue of €5.2 billion in 2018, this area is a strategic priority for the Group. Orange Money, its mobile-based money transfer and financial services offer is available in 17 countries and has 45 million customers.
“The current strategy for Orange in the Francophone countries, as well as potentially expanding to Francophone and Anglophone countries, ensures that we anticipate offerings seeking either a merger and acquisition approach into our market,” Teniola told BusinessDay.
As an alternative, Orange could establish entry into the digital financial services leveraging its point of presence via its Nigerian partners’ network, similar to what other over the top (OTP) players that have already established partnerships and alliance did. This would enable them to quickly access the millions of Nigeria living in different parts of the country who now possess a smartphone or feature phone.
“We believe that Orange is in a position to expand what we believe should be a telco driven or telco-led financial inclusion model into Nigeria. So we are very excited by the possibility of this very large operator to expand its operation into Nigeria to provide the benefits of digital technology to especially to those communities that have not up to now had services rendered to them,” said Teniola.
Orange also has the option of running purely without merging or acquiring an existing network. This was the model deployed by Reliance Communications in 2008 in India.
“While the Reliance model can work, but do they have the cash? What did Reliance do? They entered into a matured Indian telco market but spent $34b to build a modern network and in a period of 3 years, amass over 350m users. They run purely 4g (even for their feature phones) and have data so cheap it’s like water,” Adedeji Olowe, CEO of Trium, a Nigerian-based venture capital firm told BusinessDay.
