Exclusive: Orange preparing Dominican Republic exit - sources
LONDON (Reuters) - France's Orange (ORAN.PA) is considering the sale of its Dominican Republic business in a deal that could fetch up to 900 million euros ($1.2 billion), as it exits non-core markets to pay down debt, seven people with knowledge of the situation said.
Orange is in talks with several banks and is expected to appoint a financial adviser in coming days to help on the sale, said the sources who asked not to be named because the talks are private.
Orange Dominicana, which provides mobile telephone and Internet services to retail and business customers, could attract interest from players including Swedish-based mobile operator Millicom (MICsdb.ST), Jamaica's Digicel DGCGP.UL, Cable & Wireless Communications (CWC.L) as well as private equity firms in the United States and Latin America, the sources said.
Orange holds 38.4 percent of the wireless market in the Dominican Republic, against 51.2 percent for America Movil's (AMXL.MX) Claro, 7.4 percent for Viva and 3 percent for Tricom.
"With America Movil controlling over half the market, the regulators would never allow them to buy Orange's operation. If either of the other two operators (Viva or Tricom) can afford it, strategically it would make sense for one of them to buy Orange," said MorningStar analyst Allan Nichols.
A spokesman for Orange declined comment on the Dominican Republic business, but said the group regularly conducted reviews of its assets, aiming to "analyze their performance, growth potential and coherence with the group's strategy".
Orange Dominicana had 2012 revenue of 451 million euros and its subscriber base grew 5.4 percent in the first quarter of 2013, which was faster than in 2012.
"At 2 times sales, the enterprise value would increase to 902 million euros. I doubt Orange could get more than that, so a sale would probably be in the range of 675 to 900 million euros," said Nichols.
The French group received an unsolicited approach for Orange Dominicana last year, but bilateral talks didn't go very far as the parties couldn't agree on terms for the deal, one of the people said.
The Dominican Republic has a mobile penetration rate of 86.9 percent among its population of 10.2 million, according to data compiled by the Dominican Telecommunication Institute (Indotel) and the IMF.
Orange could use the proceeds of any deal to help pay down its 39.2 billion euros debts and make acquisitions in core markets in Europe and Africa, sources said.
Digicel declined to comment, while Millicom and Cable & Wireless Communications were not immediately available for comment.