Orange SA, France’s biggest phone company, agreed to sell its Dominican Republic unit to Altice, a cable and telecommunications investor, for $1.4 billion.
Completion of the deal is subject to approval from Dominican authorities, and Orange’s board will consider the transaction in the week starting Dec. 9, Altice said yesterday. The sale includes the use of the Orange brand.
Orange, based in Paris, put the business up for sale this year and has said it attracted multiple bids. Luxembourg-based Altice, founded by telecommunications entrepreneur Patrick Drahi, last month agreed to purchase Tricom SA and Global Interlink Ltd. to expand its television, Internet and telephone packages and wireless business in the Caribbean.
Orange gets “important cash” by selling what analysts at Banco Espirito Santo SA called a non-core asset in a note today. It’s also seen as “providing more reassurance on the group’s dividend commitment.”
European telecommunications companies are disposing of peripheral assets as they increase investments in high-speed mobile networks in their largest markets and cut debt. Last week, Deutsche Telekom AG agreed to sell a 70 percent stake in its Scout24 Holding digital-classifieds business.
Altice is also seeking to finalize an agreement with Grupo Leon Jimenes to become local partners on its telecommunications investments in the Dominican Republic, including Orange Dominicana and Tricom, it said.
Orange rose 0.4 percent to 9.57 euros at 12:02 p.m. in Paris. The former French phone monopoly’s stock has rebounded since reaching its lowest in a decade in July, partly reflecting Chief Executive Officer Stephane Richard’s efforts to cut costs.
Orange Dominicana SA was established in 2000 and has 3.4 million subscribers. It posted sales of about $581 million in 2012. The deal values the unit at about 2.4 times its annual revenue. The average price for 40 telecommunications acquisitions worth more than $500 million this year was 1.83 times annual sales, according to data compiled by Bloomberg.
Sales and earnings at Orange are falling as domestic competition with rivals including discounter Iliad SA weighs on prices. The carrier, which has diversified into countries from Poland to Egypt, is also trying to keep a lid on debt.
The Dominican sale is a “significant step forward in the optimization of Orange’s assets portfolio,” the company said in its statement today.
Orange was advised by Credit Suisse Group AG and Messier, Maris & Associes. Altice was advised by Lazard Ltd. Goldman Sachs Group Inc lead the financing on the deal, working with Morgan Stanley, Deutsche Bank AG, Barclays Plc and Credit Agricole SA.
Altice owns and operates cable, mobile, Internet and data-center companies in places including Israel, Belgium, the Indian Ocean region, Portugal and Switzerland, according to its website. It’s the biggest shareholder in France’s largest cable operator Numericable SAS, which held an initial public offering this month. Lazard Ltd. advised Altice on the Dominican deal.