Emirates Telecommunication (ETISALAT) the United Arab Emirates’ most valuable company, agreed to acquire Vivendi SA’s controlling stake in Maroc Telecom SA for about 4.2 billion euros ($5.7 billion) in the Middle East’s largest takeover of a phone carrier.
The purchase price for the 53 percent holding, at 100 Moroccan dirhams a share in cash, includes a 7.4-dirham dividend to be paid to Vivendi, the Abu Dhabi-based carrier also known as Etisalat said today. In a separate release, Vivendi said it expects the deal to be completed in early 2014.
The takeover will hand Etisalat control over the biggest wireless carrier in Morocco, adding to its African operations that includeEgypt and Nigeria. For Vivendi, selling telecommunications assets is a key part of the Paris-based company’s plan to transform into a new entity built around music, pay-television, European cinema and Internet in Brazil.
“This acquisition is positive for Etisalat given its existing strong presence in North Africa,” Shrouk Diab, an analyst at NBK Capital in Dubai, said by telephone. “If managed properly, Etisalat could derive a lot of cost synergies and revenue from the operations there.”
The price values Maroc Telecom at 6.2 times the company’s earnings before interest, taxes, depreciation and amortization, compared with a median of 9.5 times among its peers, according to data compiled by Bloomberg.
Overseas Expansion
Etisalat climbed 0.4 percent to close at 11.70 dirhams in Abu Dhabi, after rising as much as 1.3 percent. Vivendi added 0.2 percent to 18.75 euros at 12:55 p.m. on the Paris exchange.
Maroc Telecom closed at 98 dirhams in Casablanca yesterday. In Paris trading today, the shares fell 4.9 percent to 8.31 euros.
Telecommunications companies in the Gulf Arab region are expanding abroad as domestic markets become saturated. Qatar’s Ooredoo, formerly known as Qatar Telecom, also bid for Maroc Telecom before withdrawing its offer in June because of what it called a “lengthy” sale process.
Since last year, Ooredoo has spent about $4 billion acquiring stakes in Kuwait’s National Mobile Telecommunications Co., Iraqi mobile operator Asiacell and Tunisiana SA.
Etisalat operates in 15 countries in the Middle East, Africa and Asia, according to its website. In Africa, where it has units in Sudan, Nigeria and Niger, its subscriber base grew 6 percent to 12 million users during the first nine months of the year.
Deal Financing
Al Suwaidi is a director of the Emirates Investment Authority, Etisalat’s main shareholder, and sits on the boards of the Abu Dhabi Investment Council, Abu Dhabi National Oil Company for Distribution and International Petroleum Investment Company, according to the EIA’s website.
Etisalat said it has commitments from a syndicate of local and international banks to finance the bid. The company also has a consolidated cash balance of 11.9 billion dirhams ($3.2 billion), according to an October company statement.
Maroc Telecom’s nine-month revenue fell 4.7 percent to 21.5 billion dirhams from a year earlier because of lower earnings in its home market and intensifying competition.
The acquisition is subject to conditions including shareholders’ agreement with Morocco as well as competition and regulatory approvals, Etisalat said in its statement.
Globally, more than $250 billion in deals for the telecommunications industry have been announced this year, according to data compiled by Bloomberg. Today, Czech billionaire Petr Kellner’s PPF Group agreed to buy a controlling stake in the country’s biggest phone company from Telefonica SA (TEF) for about $3.4 billion.
[Bloomberg]