Etisalat eyes Vivendi's $5.8 billion Maroc Tel stake

DUBAI Thu Jan 17, 2013 7:42pm IST

A customer walks out of an Etisalat shop at the Dubai World Trade Centre in Dubai October 14, 2012. . REUTERS/Jumana ElHeloueh

A customer walks out of an Etisalat shop at the Dubai World Trade Centre in Dubai October 14, 2012. .

Credit: Reuters/Jumana ElHeloueh

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DUBAI (Reuters) - Abu Dhabi's Etisalat (ETEL.AD) is interested in buying Vivendi's (VIV.PA) 53 percent stake in Morocco's top telecom operator, potentially resuming foreign expansion that appeared over with its withdrawal from key Asian markets last year.

The Gulf's No.2 operator by market value has submitted a "preliminary expression of interest" for the stake in Maroc Telecom (IAM.CS), worth around $5.8 billion at the current market price, a statement to its local bourse on Thursday said.

French conglomerate Vivendi is exploring selling several assets including Maroc Telecom to pay down debt, boost a flagging share price and reduce the group's exposure to capital-intensive telecom businesses.

"The Moroccan market is relatively stable, with not much movement in terms of market share and Maroc Telecom is also the market leader, which would be important for Etisalat," said Abhinav Purohit, an analyst at consultants IDC.

"The Morocco regulator has spoken of launching LTE (next-generation network) services and Maroc Telecom is the best placed to benefit from that because it has the best network, which should reinforce its position as market leader."

In early December, Etisalat's chief executive Ahmad Julfar said his company was not bidding for Maroc Telecom.

That seemed consistent with a push to scale back foreign operations after quitting India following a license scandal and selling most of its stake in Indonesia's PT XL Axiata (EXCL.JK) last year.

Etisalat had 12.2 billion UAE dirhams ($3.3 billion)of cash and cash equivalents on its balance sheet as of September 30.

"The general belief in the market was that they wouldn't be interested in the stake - this comes as a surprise and looks like there has been a change of mind at the top," said a Gulf-based banking source who declined to be identified.

"For Vivendi, interest by another Gulf telco is a positive sign. This kind of an asset is better in the hands of a Gulf operator as they understand the markets and the politics of operating there."

Vivendi was not immediately available for comment.

Maroc Telecom offers fixed-line, mobile and internet services at home and is also a major African telecom operator with units in Burkina Faso, Gabon, Mali and Mauritania.

State-owned Qatar Telecom QTEL.QA has hired J.P. Morgan (JPM.N) to advise on a potential bid for the stake, sources told Reuters in December, while South Korea's KT Corp is also said to be weighing an offer.

Vivendi hopes to get 5.5 billion euros ($7.31 billion) for its Maroc stake.

ACQUISITION DRIVE

Etisalat's announcement is its first public approach for a foreign company since a $12 billion bid for a controlling stake in Kuwait's Zain (ZAIN.KW) failed two years ago.

Since then, the operator has overhauled management, appointing Julfar as chief executive and new heads of finance and strategy with an apparent focus away from overseas forays which failed to add much to the bottom line.

Etisalat, which operates in about 15 countries in the Middle East, Asia and Africa, spent around $12.6 billion between 2004 and 2009 buying companies, licenses and other investments abroad, according to Reuters calculations.

But the UAE still provides most of its revenue and Etisalat is fighting back against rival domestic operator du DU.DU, which has built up a 47 percent share of the country's mobile subscribers since ending Etisalat's monopoly in 2007.

Vivendi's shares were up 1.3 percent at 1203 GMT in Paris while Maroc stock was 2.5 percent ahead.

Separately on Thursday, BTG Pactual Group (BBTG11.SA), Latin America's largest investment bank, has pulled out from the race to acquire GVT SA, Vivendi's Brazil-based telecom unit, a newspaper reported.

(Additional reporting by Dinesh Nair; Editing by Hans-Juergen Peters and David Cowell)

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