PARIS (Reuters) - Orange (ORAN.PA) has agreed to sell its Dominican Republic business to Luxembourg-based cable and telecommunications company Altice for $1.4 billion as France’s largest telecom operator seeks to cut debt.
“We welcome this deal for Orange as it gives the company important cash in by selling an asset that we do not see as core for Orange,” Espirito Santo analysts wrote.
They added that the deal strengthened Orange’s balance sheet and provided “reassurance on the group’s dividend commitment”.
Orange’s head Stephane Richard said on Friday that he expected to announce the sale at “significantly over” 1 billion euros ($1.36 billion) in the next few days, adding that the deal would increase the group’s financial flexibility.
The deal gives Orange Dominicana an enterprise value of $1.435 billion, Orange said on Wednesday. Orange shares rose 0.7 percent in early trade to 9.599 euros.
Orange has been hit in recent years by regulator-imposed price cuts and the arrival in its home market of low-cost player Iliad (ILD.PA), which has driven down prices, and knocked the group’s sales and earnings. It is exiting non-core markets.
“This transaction will represent a significant step forward in the optimization of Orange’s assets portfolio,” the company said in a statement.
The group had net debt of 29.6 billion euros as of the end of June and has pledged to pay an annual dividend of 0.80 euros per share.
Orange Dominicana provides mobile telephone and Internet services to retail and business customers in the Dominican Republic. It had 2012 revenue of 451 million euros and 3.4 million subscribers at the end of September.
The transaction, subject to approval by Dominican Republic authorities, will be submitted to the board of directors of Orange during the week beginning December 9, Orange said.
($1 = 0.7374 euros)
Reporting by James Regan; Editing by Blaise Robinson and Louise Heavens