x Abu Dhabi, UAEMonday 24 July 2017

Orascom sells Tunisian stake for $1.2 billion

Qtel's acquisition of the remaining half of Orascom Telecom's Tunisian operation that it did not own paves the way for a big shake-up of the world telecoms market.

Naguib Sawiris, Orascom's executive chairman says the sale is in line with the company's strategy to dispose of non-core assets photographed at his office in the Nile City Towers.
Naguib Sawiris, Orascom's executive chairman says the sale is in line with the company's strategy to dispose of non-core assets photographed at his office in the Nile City Towers.
Qatar Telecom (Qtel) and Princesse Holdings have agreed to acquire a 50 per cent stake in Orascom Telecom's Tunisian unit for US$1.2 billion (Dh4.4bn) in a deal that could help to speed along one of the biggest telecommunications mergers of recent years.
Orascom Telecom Tunisie, also known as Tunisiana, is 50 per cent owned by Wataniya Telecom, a subsidiary of Qtel based in Kuwait, which will gain 100 per cent ownership of the company.
It is hoped the deal will help facilitate the proposed $6.5bn merger between Egypt's Orascom Telecom and VimpelCom, a Russian telecoms operator, which would create the fifth-largest operator in the world.
"The proceeds of the sale will be used in part to repay Orascom Telecom's outstanding indebtedness and will therefore reduce the amount of indebtedness that will need to be refinanced by VimpelCom as a result of the transaction," Tunisiana's parent company Weather Investments said in a statement seen by Reuters.
"This transaction is in line with our strategy to dispose of non-core assets to strengthen [Orascom's] liquidity position and balance sheet and redeploy capital in our core markets," said Naguib Sawiris, Orascom's executive chairman.
Though Qtel's management hailed the move, the deal may be even more significant for Orascom, said Karim Khadr, the head of research at Alembic HC Securities. "[Orascom] want, when the deal is signed with VimpelCom, to dispose of any non-core assets," he said. "Tunisia isn't a big asset for Orascom.
"Orascom is facing issues in extracting cash from Algeria, so that would be one way of extracting cash."
VimpelCom's bid to merge with Orascom has run into difficulties with the Algerian government, which has been reluctant to let a foreign company acquire Djezzy, Orascom's local subsidiary, which it wishes to nationalise. Orascom has said the group may seek international arbitration as a last resort, Reuters reported.
Although the Tunisiana deal may prove more significant to Orascom, Qtel's increase of its stake in Tunisiana could present significant profits, said Chandresh Bhatt, a telecoms analyst at Global Investment House. Tunisiana is "one of their major operations and is doing well", he said. "It's contributing well to the Wataniya portfolio."
The company occupied 53 per cent of the Tunisian telecoms market in the last quarter, Mr Bhatt said. "It's a sizeable market that they have. [Tunisia] isn't an undeveloped market but it is a growing one."
"Tunisiana has been an outstanding asset within our portfolio and Tunisiana has been able to establish its position as a leading communications company in Tunisia," said Sheikh Abdullah al Thani, Qtel's chairman.
The move comes as Tunisia's telecoms market hots up, with Tunisie Telecom, a rival that is majority owned by the government, expected to launch an initial public offering before the end of the year. Tunisie Telecom is 35 per cent owned by Dubai Holding.
Tunisiana had more than 5.7 million subscribers in Tunisia as of the end of September, the company said.
 
ghunter@thenational.ae
 
 
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