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Strategic consideration
Swot analysis
Concentrated revenue from France
Global penetration of brand awareness limited compared to a few brands
Group hit by a social crisis
Very financially indebted
Failure in the launching of new TV channels
Strong innovative community with over 180 000 employees
European market leader telecom player
Supply chain management capabilities
Extremely high brand value and good advertising
Over 190 million customers worldwide
Strategic situation
Regulatory environment
Intense competition
Concentration of industry
Corporate customers restrict their expenses in telecommunication
Growth in telecommunications services
Demand in e-health and multimedia sector
Demand for new technologies from emerging countries
Set up of fiber optic and 4G network
Orange mobile clients in 2012
Founded in 1998
First of the three mobile services operator in Egypt
Orange the biggest shareholder, owning 36% of shares
Very favorable reputation for GSM operations in the Middle East and North Africa
Orange turnover per area and activities in 2012
Why will the acquisition create
shareholder value?
Why this particular target?
Porter forces in France
Porter forces in Egypt
Industry description: France
- Opening of net telephony and IP alternatives
- High internet services penetration rate
- Intensification of quad-play packages
- Capital requirements
- Saturated market with a market challenger: Free
- Customer retained by historial players
-Decline in Average Revenue Per User (ARPU)
- Regulatory measures
- Opening of net telephony
Dynamic growth rate of population
Two extremely large segment markets (high and low ends)
Growth potential:
Geographically: 50M Mobinil clients in Africa
Financialy: Growing GDP despite Arabic spring
- Capital requirements
- Reputation of Mobinil as « the » GSM network operator in the Middle East and North Africa region
- Government barrier trying to protect Egyptian presence in top management
Rivalry high
Rivalry Moderate
The target is a major operator on the egyptian mobile market.
- Price war between operators prevent suppliers from dragging down profitability
- Mature market segments used to seek for lower prices
- Volatile users
- Very highly concentrated offer
- Price war between operators prevent suppliers from dragging down profitability
- Two extremely large segment markets (high end small in size yet big in value and low end cost-conscious yet demanding lower-end segment mass market)
- Dynamic market demographics- young populations (60% under 25 years of age)
Saturated Market
Intensification of mobile alternatives through the net
Intensification of competition since the launch of Free Mobile in 2012
Regulatory measures such as mobile terminations rates cuts
Orange
Mobinil
Legal and antitrust issues?
How approach the target?
The Egyptian Financial Supervisory Authority (EFSA) former CMA – Capital Market authority
The decision of the international court of Arbitration in Geneva
Friendly approach
Explained by the history of the partnership
Resolving some controling issues
Financial Synergies
Financing the deal
Cash deal :
The deal is abroad: more difficult to make a share deal
Orange as already provisioned the amount that will be paid in its previous books
Increase its debt capacity
The new simplified shareholding structure enables Orange to take its financial decisions
Mobinil could benefit from the good rating of Orange
Benefit from the impact of the « Arab Spring » on the Egyptian Financial
The Egyptian stock exchange dropped in 2012
Avoid Market penetration cost and benefit from local knowledge
Acquisition of various license for Mobinil service (2G, 3G)
Distribution channel : store, franchise, distributor
Marketing skills of Orange can be used to develop the product line of Mobinil
Higher growth on new client:
30 millions of client in Egypt in 2010
That represent almost the half of the 70 million of client of Orange in France
Bidding Strategy
Valuation