Digicel prepares €1bn bid for Orange’s Dominican Republic operations

Denis O'Brien's Digicel is expected to submit a €1 billion offer this week for the Dominican Republic operations of Orange, formerly France Telecom, as this weekend's deadline for bids approaches.

Cable & Wireless (C&W), which owns Digicel’s Caribbean mobile rival Lime, is also among the bidders, as well as Grupo León Jimenes, a local conglomerate with interests in tobacco, beer and banking.

Digicel did not respond to requests for comment yesterday, while C&W declined to comment. Orange, would only confirm that it has undertaken an "asset review", the outcome of which could include a sale of its Dominican unit.

Market share
The business that is on the block is the second-largest player in the Dominican Republic's telecoms market, with an estimated market share of 38 per cent. It has annual revenues of about €450 million and about three million subscribers.

It is an existing operation with a strong brand and customer base. Digicel specialises in establishing greenfield operations in Caribbean and Latin American markets.

If Digicel, cash-rich after losing out on a licence in Myanmar, is successful with a bid it will put Mr O'Brien in direct competition with the América Móvil operation of the Mexican Carlos Slim, the world's richest man and a long-time rival of the Irish billionaire.

Móvil’s Claro operation is the largest operator in the Dominican Republic with over half the market, having bought out the state-owned incumbent a number of years ago.

Orange Dominicana is growing at 5 per cent annually, but under the Digicel banner, that growth rate would likely increase under the company's usual strategy of undercutting incumbents. Digicel dominates the telecoms market of neighbouring Haiti, the other half of the island of Hispaniola.

Ethiopia
Separately, Mr O'Brien hinted this week that he may look to enter the telecoms market of Ethiopia, which is slowly opening up to outside investors.

Mobile penetration is less than 25 per cent in the country, which has a population of 91 million. There is just a single state-owned mobile operator, but the government has invited bids from outside investors to provide services such as data.

– (Additional reporting: Bloomberg)