Orange and Bharti Airtel International (Netherlands) BV (Airtel) on Wednesday have signed an agreement to seal Orange’s acquisition of Airtel’s operations in Burkina Faso and Sierra Leone.

Orange will acquire 100 per cent of the two companies’ share capital, Airtel said. The consolidated revenue of the two companies is around €275 million.

This will be an important step forward in Orange’s growth strategy and will bring the Group’s African footprint up to 20 countries in 2016, it said.

These acquisitions will be implemented in partnership with Orange’s subsidiaries in the Côte d’Ivoire and Senegal, it said, adding that the completion of these transactions remains subject to approval by the competent authorities.

“The outlay for Orange for these transactions will be based on the financials of Airtel’s two subsidiaries for the year ended March 31, 2016 and will represent the equivalent of 7.9 times Airtel’s EBITDA in these two countries at this time,” the company said.

Through this deal, Orange will reinforce its presence in Africa with two additional countries, adding almost 5.5 million customers to its mobile customer base.

According to Standard & Poor's Ratings Services, the sale would help raise Airtel’s ratio of funds from operations to debt by 100 basis points to about 25 per cent in 2017.

“This is assuming Bharti undertakes $1 billion each of additional deleveraging measures and spectrum purchases by March 2017. Our view is also based on our expectation that the entry of Reliance Jio in India's telecom market over the next three months won't significantly erode Bharti's competitive position or profitability,” it said.

Lazard and Société Générale were advisors to Orange for this transaction. Airtel was advised by Arma Partners LLP.

Shares of Airtel closed at ₹308.70 on the BSE on Wednesday, down 2.05 per cent from the previous close.

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