Vivendi Starts Exclusive Talks With Orange for 80 Percent of Dailymotion

France-based telecom operator Orange and French media company Vivendi have entered into exclusive negotiations over Vivendi’s offer to acquire 80 percent of video portal Dailymotion for €217 million (US $236 million). Orange will retain 20 percent of the company. Dailymotion is the second-largest video aggregation and distribution platform in the world, after YouTube, with over 2.5 billion videos viewed per month. The company had €64 million (US $70 million) in sales in 2014, which represents a 30 percent increase since 2012. If the deal goes through, Orange would use its 20 percent holding to accelerate Dailymotion’s international growth and to boost its content. Orange will use the proceeds of the transaction to finance its efforts in the digital ecosystem. Vivendi’s interest in Dailymotion accords with its strategy of exiting the telecom sector and emphasizing entertainment products. In 2013, Vivendi sold Maroc Telecom to Dubai-based Etisalat. In March 2014 it announced that it would sell French mobile operator SFR to Altice/Numericable, in a deal that has not yet closed. Orange, on the other hand, is dramatically reducing its stake in Dailymotion. However, the company apparently believes that the video service can still be a success despite the fact that it has contracted since its inception in 2011 and has still not turned a profit. Orange CEO Stephane Richard said, “YouTube is 60 times bigger than Dailymotion. It is time to speed up, to continue investing, to find new markets, to anticipate new products and services.” Vivendi Chairman Vincent Bollore said the deal is “a first step in our ambition to create a large, global group that is focused on media and content.” Whether Vivendi is the right partner to make that happen is uncertain, though. The French government put an end to an attempt by Hong Kong-based conglomerate PCCW to acquire 49 percent of Dailymotion, and its motivation appears to be nationalistic in nature. The government wants to keep Dailymotion French, but an Asian partner would be more likely to achieve a more widespread audience for the video service’s offerings. Orange’s stated ambition is to make Dailymotion a worldwide content distribution platform, but currently most of its users are in Europe. In 2013, the French government stopped a prospective sale of all or part of Dailymotion to Yahoo—a rival of Google, which owns YouTube—on the grounds that it is a U.S. company. Tarifica is the global leader in monitoring and analyzing telecom pricing. Covering hundreds of operators in every region of the globe, Tarifica’s databases of mobile and fixed line data and voice tariffs are among the largest and most in-depth in the world. Tarifica is also a leading publisher of benchmark and other pricing reports, and its analysts are recognized authorities in the telecom industry, relied upon by operators and businesses worldwide for pricing insight and guidance. Tarifica is a division of T3i Group, a diversified telecom information provider. To learn more about Tarifica, please visit www.tarifica.com.

Numericable Switches MVNO to BASE

Belgian cable operator Numericable is switching its MVNO from the Mobistar network to BASE. Numericable is active in parts of Brussels, Wallonia and Luxembourg. It started the MVNO in August 2012, and its parent company, Luxembourg-based Altice, reported 4,000 mobile customers for the activities at the end of June 2014. According to BASE, Numericable made the switch in order to gain access to 4G services. The higher speeds will be available immediately for customers on Numericable’s Mobile Start, Extra and Max plans, and all Numericable customers will switch to the BASE network before the end of the year.

In today’s market climate, where high data speed is in ever-greater demand, even MVNOs—generally associated with budget pricing and lower-end or younger users—are finding it important to provide their customers with 4G service. For Numericable’s MVNO to switch to BASE from Mobistar—which does not offer 4G access—makes perfect sense in light of this trend. In February of this year, Numericable offered 4G services to customers of its French MVNO via the network of French mobile operator SFR. Two months later, Numericable bought SFR from Vivendi, beating out French MNO Bouygues, in a deal that affirmed fixed-mobile convergence over mobile consolidation.

Clearly, if fixed-mobile convergence is to maximize its success, it will need to offer the most advanced kind of mobile service. To that end, in a scenario that may echo the French one, Numericable is said to be looking at the possibility of acquiring a Belgian MNO, either BASE (wholly owned by Netherlands-based KPN) or Mobistar (majority-owned by French group Orange). Such a deal would be a natural progression from the present decision regarding running services on BASE’s network.

The above item appeared in a recent issue of Tarifica's "The Story of The Week", a weekly report that analyzes noteworthy developments in the telecoms industry from around the world. For past issues or to learn more about The Story of The Week :  Story Of The Week

Etisalat to Sell West African Assets to Maroc Telecom

UAE-based MNO Etisalat has reported that it will sell its operations in West Africa to Moroccan MNO Maroc Telecom for a sum of US $650 million. The deal will include the sale of Atlantique Telecom, a wholly owned subsidiary of Etisalat with operations under the Moov brand in Benin, Central African Republic, Ivory Coast, Ghana, Niger and Togo. It also includes Ivory Coast-based Prestige Telecom, which provides IT services to Etisalat’s operations in all of these countries. The operator’s subsidiary in Nigeria will not be part of the transaction, which requires competition and regulatory approvals in the six West African countries. The deal has been contingent on Etisalat’s planned acquisition of Vivendi’s 53 percent stake in Maroc Telecom for €4.2 billion (US $5.7 billion), which was completed on 14 May 2014.

Vivendi, which is the parent company of French MNO SFR, has been in exclusive talks with Etisalat since July 2013 about the sale of its stake in Maroc Telecom after other bidders, including Qatar’s Ooredoo, dropped out. This sale is part of a larger move by Vivendi to focus on its more profitable media assets and has been viewed as a means to raise enough cash to write down its debts and sell SFR.

The deal has several positives for Etisalat. While the operator has a presence in 15 markets across the Middle East, Asia and Africa, its main source of revenue (at 66 percent of group revenues in Q1 2014) continues to be its home market. The UAE is a highly saturated market, which ranks highest in the world in terms of smartphone penetration (over 72 percent as of 2013). Competition is intensifying in the wake of the regulator’s elimination of the tariff approval requirement and introduction of mobile number portability in 2013. Saudi Arabia, the other Middle Eastern market in which Etisalat operates, has nearly as high a rate of mobile penetration and also will see the entry of three MVNOs. Therefore, diversification away from the Middle East makes sense.

However, some of Etisalat’s biggest international markets in terms of revenue generation, Egypt and Pakistan, have been affected by issues such as political instability and currency devaluation. Through the acquisition of Maroc Telecom, Etisalat not only gets an entry into Morocco with the leading market share of 47 percent (totaling 18.3 million subscribers), it also adds four other African countries (Burkina Faso, Gabon, Mali and Mauritania) to its portfolio and can leverage synergies that exist between operations in that region. Furthermore, placing its West African operations under the management of a successful regional operator may prove beneficial to Etisalat. 

However, it is worth noting that Maroc Telecom’s profitability in its home market has been hit by soft consumer spending and increasing competition. Bringing innovative offers to the market by leveraging the strengths of the two operators will be key to Etisalat’s future success with this acquisition.

The above item appeared in a recent issue of The Tarifica Alert, a weekly resource that analyzes noteworthy developments in the telecoms industry from around the world. To access all of the latest articles and issues:  http://www.tarifica.com/TarificaAlert.aspx