France Telecom and Agility have taken a 44 per cent stake in Iraqi telecommunications operator Korek yesterday.
Joint venture to take stake in Iraqi telecoms firm Korek
France Telecom and Agility, a Kuwaiti logistics company, have bought a minority stake in the Iraqi telecommunications operator Korek Telecom.
The two companies will form a joint venture to take a 44 per cent stake in Korek with an option to take majority control in 2014.
The deal will expand France Telecom's presence in the Middle East while providing Korek with the boost in capital it needs to build its wireless network throughout Iraq. Korek is Iraq's third mobile company after buying a licence from the government in 2008 for US$1.25 billion (Dh4.59bn) and has spent $900 million building a mobile network across the country.
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Agility will take an indirect 24 per cent stake in Korek after exercising its option for a convertible loan worth about $250m and by investing an additional $50m. It will also provide a $100m shareholder loan to Korek that will mature in four years.
France Telecom will pay $245m for a 20 per cent indirect stake in Korek and extend a $185m shareholder loan that will also mature in four years. It will have the option to increase its stake in Korek in 2014 to 27 per cent.
"The acquisition of this stake in Korek Telecom is a new step in our policy of expansion outside Europe, and contributes to our stated aim of doubling our revenues in Africa and the Middle East by 2015," said Stephane Richard, the chairman and chief executive of France Telecom.
Korek has about 3 million subscribers and mainly operates in Iraq's semi-autonomous Kurdistan region, with isolated coverage in some major Iraqi cities including Baghdad and Kirkuk.
Iraq is viewed by industry observers as the last major opportunity for telecoms operators to expand in the Middle East.
The country has a mobile penetration of about 75 per cent and that should rise to 86 per cent - or about 28.6 million subscribers - by 2014, according to Arab Advisors Group.