On July 5, France Telecom put additional substance in its plans to expand its emerging markets. Unveiling a so-called “Conquests 2015” plan, the company aims to double its revenues in the Middle East and Africa (MEA) region by 2015. That is ambitious, and will require the “acquisition” of around EUR 2.5bn in revenue.  

 France Telecom has 19 operations in the MEA region; the region generated EUR 3.4bn in revenue in 2009, up 5% from the previous year, with EBITDA margin solidly at 42%. The company expects organic growth around 5%-6% over the medium term, which means that the realization of its target will have to be primarily acquisition-based. France Telecom estimates that it’d have to spend around EUR 5-7bn, a not inconsequential amount.

 In Africa, the company’s options are multiple, though many have narrow value. There are few mid-scale to large value options; large pan-African players such as MTN or Zain are either too large or not for sale. Other pan-African players are only moderately attractive. A market-by-market approach may be best, if painstaking. FT still has no operational presence in sub-Saharan Africa’s largest markets, South Africa and Nigeria. Cell C would fill the South African gap, while Etisalat or Bharti may be talked out of their Nigerian operations, though that’s unlikely. Cross-segment deals are more likely, with more acquisitions in the Internet space, though most operations there may be too small.

Last June, Nigerian carrier Globacom revealed it had received a license from the government of Senegal; the announcement created much ado, for the license was awarded outside of traditional channels, with the country’s regulator ostensibly not aware of it. The process was certainly a step back for Senegal’s telecoms regulatory framework. As for Globacom, it’s another step in the company’s relentless effort to build a strong challenger to France Telecom in French-speaking West African markets.   

Over the past few years, Globacom has advanced meticulously, like a spider spinning its web. From its base in Nigeria, the company acquired licenses in Benin, Ghana, Cote-d’Ivoire and now Senegal. While the mobile portion of the licenses typically garners the most attention, it is mere pretense. In all these markets, Globacom would be the fourth mobile operator at best, with challenging profitability prospects. The value is elsewhere, rooted in the upcoming launch of Globacom’s Glo-1 submarine cable.

The licenses provide Globacom with more than landing points; they are a beachhead into West Africa’s burgeoning and underexploited wholesale market, a starting point to offering services in typically neglected landlocked West African countries. With its current coverage, Globacom will be in a position to challenge France Telecom and its primary West African vehicle, Sonatel, by selling bandwidth and corporate services into such markets as Mali, Burkina-Faso and Cote-d’Ivoire, and leveraging the volumes afforded by its Nigerian presence.

Globacom is too often under-estimated, primarily because  the company is information-shy and somewhat nebulous. It’s a mistake to do so; on evidence alone, we find Globacom’s strategic acumen to be as good as any; they know precisely what they are doing.