France Telecom is to buy Motorola’s stake in Egyptian mobile operator Mobinil for $252 million.
France Telecom has done well to gain control of Egypt’s biggest mobile operator. $252 million seems a fair price for Motorola’s 25% stake of Mobinil, which has 1.2 million subscribers.
France Telecom’s purchase follows Vivendi Universal’s E2.3 billion investment for a 35% share in Maroc Telecom. Although this seems a considerable overvaluation of the Moroccan operator, it fits with Vivendi’s focus on content provision and developing its infrastructure for content delivery (Vivendi owns Cegetel, France’s second largest mobile operator and has stakes in BSkyB and Canal+).
But why the sudden interest in North Africa? Along with Latin America this region is one of the last remaining markets for mobile operators to target. With poor fixed line infrastructure it looks like mobile devices will bypass further fixed line investment here – the future is in wireless telecommunications.
Companies want to get in early and corner these markets. North Africa has considerable potential and Egypt is a good place to start. It is one of the more developed African countries, with several large urban centers. The populace is concentrated in the cities (17 million in Cairo alone) and along the Nile. Egypt also lies at the junction between two continents; France Telecom’s experience in Egypt could therefore help future expansion into Africa and the Middle East.
France Telecom already has a relationship with Mobinil, which was created jointly by France Telecom, Motorola and Orascom two years ago, so cultural issues will hopefully be minimal.
This is an excellent opportunity for the French telco to push the Orange brand into an immature market and expand its global coverage. As roaming becomes more important, business executives (and tourists) will choose operators that have an international presence and a strong global brand. Although France Telecom’s Mobinil investment isn’t geared at tourists who want to phone home from the foot of the Sphinx, in the long-term it will certainly help Orange become one of the wonders of the mobile world.
