Orange Outsources African Towers - Analyst Blog


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Orange, a subsidiary of France Telecom ( FTE ), signed an agreement with IHS, a telecom infrastructure operator, to manage and run its 2,000 towers in the African countries of Ivory Coast and Cameroon. None of the companies have divulged financial details of the deal.

Per the deal, IHS plans to operate the towers to improve the mobile infrastructure of the two African nations, for the next 15 years. Under IHS's tower-sharing model the available space on 2,000 towers will be marketed to other mobile carriers in Africa, while the Orange subsidiaries will get access to the available space of IHS in both the countries. However, the ownership of the property will remain with the two Orange subsidiaries.

Pan African operator IHS, through its tower sharing model, manages around 5,000 towers and allows its partner to enhance network coverage, improve customer experience and derive cost efficiency.

To further expand the network coverage, IHS plans to build new hybrid solar and generator power sites, which will reduce diesel consumption up to 70%. Solar-powered sites are extremely beneficial in rural areas due to low data traffic demand and lesser diesel consumption, which in turn reduces tower operating costs.

According to Orange, sharing its infrastructure with a tower specialist is favorable for the company as it will be able to handle situations like volatile energy costs or land accessibility, better than its partner.

We believe that outsourcing tower infrastructure will not only save Orange's operating cost, but will also help the French giant to gain from the technical know-how of IHS.

Currently, France Telecom carries a Zacks Rank #3 (Buy).

Other Stocks to Consider

Other stocks to consider among foreign telecom companies are Rogers Communications Inc. ( RCI ), China Telecom Corp Limited (CHA ) and Liberty Global Inc. ( LBTYA ). All the stocks carry a Zacks Rank #2  (Buy).

FRANCE TELE-ADR (FTE): Free Stock Analysis Report

LIBERTY GLBL-A (LBTYA): Free Stock Analysis Report

TELEFONICA S.A. (TEF): Free Stock Analysis Report

TELECOM ITA-ADR (TI): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Stocks: FTE , LBTYA , TEF , TI

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