Wednesday, 24 July 2013

Etisalat starts to make plans for when it becomes the third largest African telco..

As the sale of Maroc Telecom to Etisalat slowly inches forward, with Vivendi finally getting round to saying it had entered into exclusive talks with Etisalat to sell its 53 percent, Etisalat has started to consider what this might mean.

It has already met with analysts and shared its plans to create a French-speaking telecom cluster of about 42 million subscribers across 10 countries in West Africa. Etisalat is already present in Benin, Cote d'Ivoire, Gabon, Niger, Central African Republic and Togo with its Alantique (Moov) subsidiary. Maroc Telecom will be contributing units in Morocco (of course), Mauritania, Burkina Faso, Mali and also Gabon. 

Etisalat share of African mobile subscription market before and after Maroc Telecom acquisition as at Q1 2013

Source: industry sources, company reports, Blycroft estimates c. Blycroft 2013

The deal would see Etisalat's share of the African mobile subscription market move from 7 percent with some 50.78 million subscribers to 11 percent with around 82.7 million.
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Gabon - even with the combined subscriber base - will still only be the third smallest Etisalat market in Africa. Past experience suggests that the merger of networks can be a protracted affair: the UK's EE network still reflects the original T-Mobile and Orange architecture some three years after the two announced the merger. And as with the UK's EE, the combined subscriber base will ultimately lose members, as subscribers with duplicate subscriptions  cancel. 

The Moov network in Gabon has some 410,000 subscribers, and Maroc's 820,000. AMETW is forecasting a combined total of around 1.24 million, with the smaller Moov network being absorbed by the larger Gabon Telecom operation.

Etisalat African properties post-Maroc Telecom acquisition Q1 2013

Source: industry sources, company reports, Blycroft estimates c. Blycroft 2013

Etisalat says economies of scale, reduced capital expenditure costs, potential mobile data revenues and new digital services are all strategic reasons to merge the operations in Africa. 

However, the Moroccan government, which has a blocking 30 percent stake in Maroc Telecom, still has to decide whether to allow the deal.

In April 2013 Vivendi had two bids for its stake from Etisalat and Ooredoo, formerly Qatar Telecom (Qtel). In June the latter withdrew, saying the negotiations were taking too long, and it had other bids in play. It subsequently won a licence in Myanmar.

Etisalat would move from fifth place to a comfortable third in the African Major Telcos league table - ahead of the likes of Orange and Airtel - and leaving it with just MTN and Vodafone/com stopping it from being Number 1 on the continent. To take top spot it just needs to double in size again...  


John Summers

Editor,   Africa & Middle East Telecom-Week Africa & Middle East Telecom Weekly News Briefing (free distribution)


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