Still investing in Africa
France Telecom operates in 17 countries across Africa and competes with MTN in six markets including Cameroon, Cote d'Ivoire and Uganda. Orange now also competes with Vodacom in the DRC. In this report we give an overview of the mobile market and operators in each of these countries to evaluate the relative performance of Orange against MTN and Vodacom during 3Q11.y

Africa continues to drive revenues
Excluding Egypt and Ivory Coast which were faced with the political unrest, France Telecom's Africa & Middle East operations reported revenue growth for the nine months to date of some 6.5%. This is in the face of a decline of 1.6% in group revenues for the same period. We note the groups Africa & Middle East operations contribute 8.4% of group revenues.
Improving subscriber metrics

After a more challenging start to the year, a number of France Telecom's operations across Africa delivered pleasing subscriber results in the quarter. Ivory Coast appears to have turned around while Cameroon is improving post the subscriber registration process. In Uganda the group reported record subscriber acquisitions and the trends in Guinea and Guinea-Bissau also look encouraging.

African acquisitions support growth
France Telecom continues to invest in Africa and the strong YoY trends in 3Q11 were boosted by the new operations such as Guinea, Uganda and Niger. France Telecom has also recently announced the acquisition of CCT in the DRC. The group will be recapitalizing this operation to take advantage of the low mobile penetration in a market with a population of close to 70m.

Eoin Treacy's view

My view - I was surprised on my recent trip to China at just how many Africans were browsing through the various wholesale markets. I chatted with one man from Guinea who was exporting a couple of containers of cheap electronics back home. In the West we tend to have a jaundiced view of Africa. The small size of its various capital markets are prone to volatility and difficult to invest in. However I have heard too many stories over the last few years of peace breaking out, low end manufacturing moving in, incrementally higher living standards and capitalism thriving to ignore the trend. Africa is developing albeit from a very low base.

France Telecom, faced with a low growth environment at home, is right to explore opportunities in a potentially high growth market. The share remains within a lengthy base and has been trending lower since 2007. Its relatively steady yield of over 11% should help to cushion it somewhat but a sustained move above €14 would be required to question the progression of lower rally highs.

This well illustrated report from Imara Securities also focusing on the African telecoms sector may also be of interest.