The multinational telecommunications company Altice, based in Luxembourg and with presence in Europe, Asia and the French Antilles in the Caribbean, announced today that it agreed to acquire 100% shares of Orange Dominicana for an amount close to US$1400 million. The operation will be discussed by Orange Board as from December 9, and must be approved by the regulatory bodies of the country.
This decision by France Telecom (Orange parent company) to sell its Dominican business, began to be studied in July this year, and is due apparently to the need of liquid cash that the company has to pay debts, and to the fact that this was its only business in Latin America and the Caribbean beyond the French Antilles.
Among speculations about potential buyers, Digicel was the louderest name heard until a few days ago, who, according to Bloomberg news agency, would have analyzed to offer US$1.300 billion for the operator. However, this offer was not officially confirmed by the companies involved.
Claro competitor is born. Orange purchase is not the first movement made by Altice in the Dominican Republic. Prior to that, in late October, Altice bought, through its Caribbean subsidiary, 88% of the shares of Tricom, keeping control over it.
With these two acquisitions, Altice ensures to enter the market with a significant presence in the four major segments (mobile telephony, fixed telephony, fixed broadband and pay TV), and consolidates itself as a competitor of Claro, the dominant player in all of them.
In mobile telephony, Orange owns approximately 36% of the market (about 3.4 million subscribers), and Tricom has over 6% (approximately 600,000 customers), according to data reported by Convergencia Research as of October 2013. Therefore, Altice will keep 42% interest which will allow it to compete evenly with Claro, which owns 53%.
On the other hand, in pay television services, fixed broadband and fixed telephony, Altice will keep the 23%, 24% and 25% interest held by Tricom, respectively. However, these businesses it will be at a comparative disadvantage versus 40%, 71% and 68% of Claro.
It should be noted that in the statement published by the multinational company to announce the agreement with Orange strong emphasis was placed on the strategy to provide Quad Play services.
Partnership with Grupo León Jimenes. Altice advances in the statement that it is in negotiations to join in partnership with local Grupo León Jimenes, a family cluster which so far has not ventured into telecommunications.
The origin of this group dates back to 1903 with the establishment of the cigarette company La Aurora in San Pedro, and since then the family was devoted to tobacco and beer business in addition to mass consumption food products. Its main operation is Cerveceria Nacional Dominicana (CND), in which León Jimenes SA (ELJ) currently owns 49% of the shares, after the sale of 51% to the Brazilian AmBev (Compañía de Bebidas de las Américas) in 2012.
It should be remembered that León Jimenes Group was mentioned at some point as party possible interested in Orange purchase.