[ Etisalat ]
is buying 53 per cent of Maroc Telecom from France’s Vivendi for €4.2 billion (Dh20.81bn), the UAE telecoms company’s first overseas acquisition in five years.
The agreement, which both parties signed on Monday, brings a close to months of negotiations.
Etisalat said yesterday it had signed a share purchase agreement to acquire Vivendi’s stake for €3.9bn. Upon the deal’s completion, Etisalat will pay Vivendi €300 million in cash – equivalent to the 2012 dividend of 7.40 Moroccan dirhams a share set aside by Maroc Telecom for Vivendi.
However, the deal remains subject to conditions, including securing competition and regulatory approval from Morocco and other relevant jurisdictions, as well as the execution of a shareholders’ agreement with the Moroccan state, which owns 30 per cent of Maroc.
Moroccan regulations oblige Etisalat to make a takeover offer to Maroc’s other shareholders, which could result in Etisalat further increasing its stake.
The outstanding free float represents 17 per cent of Maroc Telecom’s equity. Etisalat declined to comment on when such an offer would be issued.
Etisalat said in April that it planned to finance the transaction with external funding and had secured the required funds from local and international banks.
A source with knowledge of the matter said the acquisition would be funded with cash and bank loans, but declined to give further details.
Etisalat has been in exclusive talks with Vivendi regarding the Maroc Telecom stake since Qatar’s Ooredoo withdrew from discussions in June.
In July, Etisalat and Vivendi entered into exclusive negotiations, with Etisalat submitting a binding offer to acquire Vivendi’s stake for €3.9bn.
Talks between both parties had been scheduled to last until September 25, but were subsequently extended to the end of last month.
A source close to the process said the extension was not because of fundamental disagreements, but it was due to delays in negotiations during the summer, Ramadan and Eid Al Adha.
Maroc Telecom is Morocco’s largest mobile operator, with a market share of 47.7 per cent at the end of June, according to data from Informa Telecoms & Media.
It dovetails with Etisalat’s strategy to expand into emerging markets in the Middle East and Africa, according to Matthew Reed, principal analyst at Informa.
In addition to its operations in Morocco, Maroc Telecom also has operations in Burkina Faso, Gabon, Mali and Mauritania, which complement Etisalat’s existing presence in eight markets in sub-Saharan Africa.
Mr Reed, however, noted that the operator’s core business in Morocco had been declining in recent quarters amid fierce competition in an increasingly mature market.
“They’ll want to arrest and reverse that decline, it’ll be one of Etisalat’s first priorities once the deal is done,” he said.
Etisalat made an ill-fated investment in India’s Swan Telecom (later rebranded as Etisalat DB) in 2008. Etisalat was forced to wash its hands of that investment last year, after the relationship with local shareholders soured.
The UAE firm subsequently tried to acquire 46 per cent of its Middle East rival Zain in 2010 for US$12bn, only for the deal to fall through in 2011.
In light of those missteps, the acquisition of Maroc Telecom was a welcome boost for Etisalat, said Petr Molik, the head of financial advisory at Menacorp.
“The price they agreed for Maroc Telecom was a fair one. There was no price discount, but neither was there a premium,” Mr Molik said.
“They’ve made a statement that they can do a big acquisition that’s run professionally where they don’t overpay for the assets,” he said. “[Maroc Telecom] is a great cash generator. The margins are there, overall it’ll improve the group and strengthen them in French Africa.”
Etisalat’s shares closed up 1 per cent at Dh11.7 apiece yesterday.
jeverington@thenational.ae
