After almost nine months of issuing the initial tender to sell
its Dominican unit,
) has divested its operations in the Central American nation to
Luxembourg-based Altice for $1.4 billion. The news boosted the
stock price as it ended 2.31% higher on Wednesday trade on
Orange, is a leading telecom player in Dominican Republic, and
has more than 3.4 million customers. However, Claro, owned by
America Movil S.A.B de C.V.
), is the largest service provider in the Dominican Republic and
controls more than half of that market.
Last July, the French telecom giant decided to offload its
Dominican operation and attracted bids from several companies
including major Central American operators like Digicel, and
Cable and Wireless Communications. However, in late Nov, the
company agreed to sell its asset to Altice, following necessary
The asset sale is believed to be a part of the strategy opted
by the company to reduce its non-core assets and concentrate on
the central ones. Orange is also considering options to either
reduce its stake or sell its Kenyan and Ugandan operations, both
of which have been struggling in recent years amid stiff
Although Orange is exiting Dominican Republic, Altice is
expanding its operation in the country. Altice has already
acquired Tricom SA and Global Interlink in the Dominican
Republic. Upon combining with Orange, Altice will have an
approximate customer base of 4 million.
The transaction is expected to augment Altice's presence in
the Caribbean, where the company offers wireless, broadband and
pay-TV services in Martinique, French Guyana and Guadeloupe.
On the flip side, teledensity of around 90% does not present
Orange with of a long-term opportunity in Dominican Republic. We
believe that the sale of the Dominican arm brings in the much
needed cash for the company to reduce its debt burden and
concentrate on Europe and other emerging nations.
Orange currently carries a Zacks Rank #3 (Hold). Other stocks
worth considering within this sector are
SK Telecom Co Ltd.
Shenandoah Telecommunications Co.
). Both the stocks currently carry a Zacks Rank #1 (Strong
AMER MOVIL-ADR (AMX): Free Stock Analysis
ORANGE-ADR (ORAN): Free Stock Analysis Report
SHENANDOAH TELE (SHEN): Free Stock Analysis
SK TELECOM CO (SKM): Free Stock Analysis
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