Vivendi to sell Maroc Telecom stake to Etisalat for €4.2B

Vivendi said it signed a definitive agreement with Etisalat for the sale of its 53 per cent stake in Maroc Telecom for €4.2 billion ($5.68 billion) in cash, concluding a process that had been dragging on since both Dubai-based Etisalat and Ooredoo of Qatar submitted bids in April.

Ooredoo eventually dropped out in June and Vivendi entered into exclusive talks with Etisalat in July, but it has taken until now to smooth the path to allow the UAE-based operator to buy a majority stake in the Moroccan operator. The deal is still subject to regulatory approvals, although Vivendi said it is confident the transaction will be completed by early 2014.

Citing comments from sources in April, Reuters said Etisalat had promised to make Maroc Telecom the flagship of its African operations and deploy Maroc Telecom executives throughout Africa. The Kingdom of Morocco also owns a 30 per cent stake in the operator.

For Vivendi, the move forms part of its strategy to focus and strengthen its businesses around media and content activities. A spin-off and eventual initial public offering are also believed to be under consideration for its French operator SFR, although nothing has yet been confirmed.

"Vivendi is selling a business that is ex-growth and has declining margins with a shareholder setup that is quite complicated," Conor O'Shea, head of media sector research at Kepler Capital Markets in Paris, told Reuters. "I would say this was a good sale rather than a good purchase."

Etisalat will nonetheless gain control over the largest mobile operator in Morocco as well as a larger footprint in sub-Saharan Africa, Reuters noted. The transaction also marks a return to M&A by the Dubai-based operator, which spent about $12.6 billion on foreign acquisitions from 2004 to 2009.

"This acquisition is positive for Etisalat given its existing strong presence in North Africa," Shrouk Diab, an analyst at NBK Capital in Dubai, told Bloomberg. "If managed properly, Etisalat could derive a lot of cost synergies and revenue from the operations there."

Etisalat operates in 15 countries in the Middle East, Africa and Asia, according to its web site. Like a number of other operators in the Persian Gulf region, Etisalat is looking to expand abroad as domestic markets become saturated.

For more:
- see this Reuters article
- see this Bloomberg article

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