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Orange Increases Investment in Burkina Faso

Orange bought the service from Bharti Airtel last January, along with operations in Sierra Leone, for an undisclosed figure. The move comes as Orange’s services elsewhere in Africa have struggled to grow, according to the company’s latest results.

Bruno Mettling, who is both deputy CEO of Orange and CEO of Orange MEA (Middle East and Africa), said: “It is a great honor for the Orange group to inaugurate its presence in Burkina Faso at a time when the country is resolutely engaged in a vast economic development programme. The arrival of the Orange brand testifies to our commitment to providing the benefits of the digital ecosystem to the entire population of Burkina Faso.”

Orange is the biggest telecoms operator in the country, with 6.3m subscribers. It plans to expand its 3.75G and mobile banking services in a country that has one of the least developed mobile telecoms sectors in Africa. The CEO of Orange Burkina Faso, Ben Cheick Haidara, said: “We are at a decisive turning point in the development of the telecoms market. Our ambition is to continue the work accomplished in recent years in the mobile money and mobile internet fields.” It is also investing heavily in fibre optics.

Annual results
The company lumps all results for the MEA region together in its annual report, so there are no separate figures for Africa. However, only two of the 21 markets in its EMEA region are in the Middle East, Iraq and Jordan, so the overall figures are likely to be a fair reflection of its performance on the continent.

Orange’s MEA income grew by just 2.6% in 2016 to €5.25bn and its earnings before interest, tax, depreciation and amortization actually fell, by 1% to €1.66bn, in comparison with a 5% rise the previous year.  These figures do not suggest that the company is on course to meet its target of increasing its annual revenues in Africa by 20% over the period 2015-19.

The firm cited economic difficulties in Democratic Republic of Congo and Egypt, plus “an unprecedented level of disconnections linked to the strengthened requirements regarding verification of customer identities in most countries” as major factors in the performance. It has more subscribers in Egypt than in any other country. Orange MEA had 120.7m subscribers at the end of 2016, a rise of 7.2m over the year, although it gained 7.4m when it took over operations in Sierra Leone and Burkina Faso.

Strategic priority
Orange insists that Africa remains a “strategic priority” and intends to keep growing its operations on the continent. Bharti Mittal is considering selling more of its African assets and so could provide one option. In February, Yannick Decaux, Orange’s commercial director for Africa, said: “We are looking for acquisition opportunities in Africa; it is a priority region for us. We are speaking to everyone.”

The big hole in Orange’s West African operations is Anglophone Nigeria, but this is already a fairly competitive market, so acquiring an existing operator may be the best way to enter the market. There is certainly more scope for Orange to grow its revenues in Sub-Saharan Africa than in the French company’s home market. It has recently increased its stake in Orange Tunisia to take control of the company, but most of its expansion will be targeted at Africa south of the Sahara.

A spokesperson for the company said: “With a fast growing demography and rapidly growing economies, Africa is without any doubt a certain bet for future growth. We remain confident that over the next 20 or 30 years Africa will see the highest level of growth in both population and the economy.”

In the medium term, much will depend on the speed with which the price of smartphones continues to fall, as this will boost the consumption of wireless data by African subscribers. Orange is also expanding Orange Money, its main money transfer and mobile financial service, across West Africa. Its African mobile money revenues are increasing by more than 50% a year.

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