France Telecom targets DR Congo mobile operator

PARIS: France Telecom is weighing a bid for the fourth-largest mobile operator in the Democratic Republic of the Congo, as part of its effort to expand in fast-growing markets in the Middle East and Africa.

A deal for Congo-China Telecom (CCT), still being negotiated, would involve buying a 51 percent stake owned by Chinese telecom gear maker ZTE , and the 49 percent that the national government has put up for sale.

"We are in exclusive talks with ZTE about acquiring its 51 percent stake in CCT in addition we are studying whether to participate in the tender offer by the Democratic Republic of the Congo for its stake," a France Telecom spokeswoman said.

The deal could cost France Telecom roughly 300 million euros ($424 million), since CCT has a lot of debt, which would have to be accounted for, according to a person familiar with the matter.

France Telecom is pursuing growth in emerging markets to offset intensifying competition at home, with Chief Executive Stephane Richard aiming to double revenue in emerging markets to 7 billion euros by 2015, largely via acquisitions.

Since Richard took over last year, the group has expanded into Morocco, Iraq and Tunisia, often by buying minority stakes that can be converted into takeovers under shareholder pacts if the company chooses.

This year, Elie Girard, executive vice-president of strategy and development, said France Telecom could reach its goal of doubling revenue in emerging markets by increasing its minority stakes in Tunisia, Morocco and Iraq, but planned to also look for opportunities elsewhere.

CCT is the fourth-biggest operator in the DRC, a country of 65 million that is covered by a second-generation wireless network.

The market is relatively open because no operator is dominant nationally and only 17 percent of people have mobiles.

"If it is concluded, this deal would be in line with the international expansion strategy of France Telecom in the Middle East and Africa," the spokeswoman said.

Copyright Reuters, 2011