Etisalat drops $12 billion Zain bid (UAE)
Middle East’s biggest phone company, Emirates Telecommunications Corp. has ended its talks to acquire a majority stake in Zain, Kuwait’s largest, citing political unrest and disagreement among shareholders.
According to the company, the current political unrest in the region and non- unanimous agreement among Zain shareholders mean the offer is no longer viable.
Etisalat first announced its bid to acquire 46% of Zain in September. The collapse of the deal comes after two months of unrest across the Middle East and North Africa that has toppled Egyptian and Tunisian presidents, created civil war in Libya and prompted deadly clashes in Yemen and Bahrain, countries bordering Saudi Arabia.
Etisalat’s offer was contingent on the sale of Zain’s 25% stake in Zain Saudi Arabia. Offers from Bahrain Telecommunications Co., known as Batelco, and Saudi billionaire Prince Alwaleed bin Talal’s Kingdom Holding Co. were rejected by Zain last month.
The company already operates in 18 countries across the Middle East, Asia and Africa. It has over 100 million customers.
Zain Q4 net profit rises (Kuwait)
Kuwait’s Mobile Telecommunications Co. Zain stated that its 2010 net profit rose as the company added new subscribers and that it plans to double its net profit by 2014.
The subject of a nearly $12 billion takeover offer by U.A.E.’s biggest telecoms company Emirates Telecommunications Corp., Etisalat, said its net profit excluding a capital gain from selling its African assets rose to US$1.02 billion, compared with US$700.80 million a year earlier.
Net profit reached US$3.80 billion, including a capital gain of US$2.76 billion from the sale of Zain Africa assets on June 8, 2010.
According to Zain Group Chief Executive, Nabeel Bin Salamah, the company targets organic growth and more than doubling its net profit by 2014. To realize their business aspirations, they have devised an integrated strategy that will hopefully aid them, through organic growth, to reach 52 million customers, generate 6.3 billion in revenues, and increase earnings before interest taxes, depreciation and amortization to $3.4 billion– while improving the EBITDA margin to 53%-and more than double their net profit to $2.1 billion by 2014.
Zain stated that 2010 revenue reached US$5.03 billion, 7% increase from the year earlier. Zain added that its mobile customers stood at 37 million at the end of December, an increase of 23% from the same period a year earlier.
Etisalat to borrow $12 billion for Zain (UAE)
If sources are to be believed, Emirates Telecommunications Corp. is planning to raise $12 billion of loans to fund its bid for a stake in Kuwait’s biggest phone operator.
According to sources, Etisalat is seeking $6 billion in a one-year loan that can be extended by six months. The debt will be refinanced with bond sales, following Etisalat’s formation of an issuance program in November for as much as $8 billion.
As per the previous statements by Etisalat, it offered about $12 billion for a 46% stake in Mobile Telecommunications Co., or Zain.
According to sources, the Abu Dhabi-based company is also planning to raise $3 billion in a three-year loan and another $3 billion for five years.
The deal would extend Etisalat’s reach in the Middle East, where Zain operates in countries from Kuwait and Iraq to Bahrain. Etisalat offers telecommunications in 18 countries in the Middle East, Africa and Asia, counting more than 100 million customers. The seven emirates of the U.A.E make up about 86% of Etisalat’s sales.
Kuwait’s commercial court set Dec. 15 as the date to consider a lawsuit to stop the due diligence process to sell the stake in Zain to Etisalat.
Etisalat sorts out $12bn M&A debt
If sources are to be believed, United Arab Emirates’ biggest mobile-phone operator Emirates Telecommunications Corp., also known as Etisalat, is sorting out final details of up to $12 billion of financing to support its acquisition of a 51% stake of Kuwait’s Mobile Telecommunications Co., or Zain.
According to sources, the financing is being structured as a $6 billion bridge loan to bond issue with a one-year maturity and an option to extend for six months. The remaining $6 billion is evenly divided between a three-year loan and a five-year facility. The structure has all but been worked out. The company is just talking about the finer detail now.
Etisalat is still undertaking due diligence on Zain with the process being slowed down by local holidays.
Some shareholders oppose Zain deal – Chairman
As per the Chairman of Emirates Telecommunications Corp (Etisalat), a multibillion-dollar deal to buy a stake in Kuwait’s Mobile Telecommunications Co. was opposed by some shareholders but was still at an early stage.
According to Mohammed Omran’s statement, the company has previously made a preliminary proposal and is still at an early stage. The due diligence process has yet to start. The company will not conclude a transaction until the final results of the due diligence are considered by the board. This will take a number of weeks.
According to Etisalat earlier statements, it had offered to buy a controlling 46% stake of Kuwait’s largest mobile operator Zain at a cost estimated at well above US$10 billion. The offer was made to Khorafi Group, the largest private investor in Zain, and since then talks have taken place to beat out the deal amid reports of opposition from some shareholders.
According to Omran, most of the reaction in Kuwait has been very positive, however as in any high-profile transaction there is some opposition from some shareholders. He was referring to statements by Ali al-Mussa, chairman of Kuwait’s Securities House, who claims that he represents the interests of shareholders who own around 20% of Zain.
The government and its institutions own approximately 27% of Zain, and 10% are treasury stocks that are neutral.
As per Omran, the acquisition would be consistent with Etisalat strategy to expand beyond mature core markets into growth markets.
If accomplished, the deal would make Etisalat, the largest telecommunications firm in the region ahead of Saudi STC.
Omran told that Etisalat has received several attractive proposals from banks to finance the transaction.
Etisalat mulling over Iraq’s telecom option, to decide by year en
www.WirelessFederation.com/news: The second-largest Arab telecom operator by market value, Emirates Telecommunications Corp, or Etisalat said that it will decide whether to bid for a licence or buy a stake in a local player in Iraq, by the end of 2009.
The company is holding talks with Korek Telecom of Iraq, to acquire 51% stake in the company. Etisalat is also planning to bid for fourth mobile telecom license in Iraq after the government announced plans earlier this year to launch a new auction.
Etisalat is waiting to hear from the Libyan authorities about the company’s bid for a license in the region besides, bidding for third mobile license to be launched by the Syrian government.
The company is also keeping a close eye on Iran’s situation where the Abu Dhabi-based company along with a consortium won an international tender for Iran’s third mobile phone license in 2009. However, the deal later fell through.
China Mobile to Make First International Purchase
Bloomberg writes…China Mobile Communications Corp., the world’s biggest cell-phone company by market value, agreed to buy Pakistan’s Paktel Ltd. in its first acquisition abroad to gain access to a market that added 34 million users in 18 months.
The Beijing-based company will pay $284 million to buy 89 percent of Paktel Ltd., Pakistan’s oldest mobile-phone company, from Millicom International Cellular SA, the Luxembourg-based company said yesterday in a statement.
China Mobile will need to invest in equipment and marketing to revive Paktel, the only operator in Pakistan that is losing customers. Cell-phone users in Pakistan more than doubled in five of the past six fiscal years to 46 million in November, lagging behind only China and India in new subscribers in Asia.
“The same set of structural growth dynamics that have been driving the China and India markets apply to Pakistan,” Tucker Grinnan, head of regional telecoms research at HSBC Holdings Plc. in Hong Kong, said. “There hasn’t been a bidding war for Paktel, unlike for lots of other emerging market assets.”
China Mobile’s $284 million investment will give it access to Paktel’s 1.38 million users. That compares with Hutchison Essar Ltd., India’s fourth-largest operator, which is valued at about $18 billion by bidders seeking to buy a company with 22.3 million subscribers.
Shares Rise
The so-called enterprise value of the transaction is $460 million, including repayment of intercompany debt, the Millicom statement said. Lazard Ltd. advised Millicom on the deal. Rainie Lei, a spokeswoman for China Mobile Ltd., the Hong Kong-listed unit, confirmed the details of the agreement. Millicom, founded in 1979 by Kinnevik AB to pursue mobile-phone opportunities in the U.S., has operated in Pakistan since 1990.
Shares of China Mobile rose 4.3 percent to HK$73.85, the highest since July 2000, compared with a 2 percent gain in the Hang Seng index.
China Mobile failed in July to buy Millicom, which has networks in Latin America, Asia and Africa, and lost a bid for Pakistan Telecommunication Co. to Emirates Telecommunications Corp. China Mobile will be challenging for market-leader Mobilink’s 22 million users. Ufone, owned by Pakistan Telecom, is the nation’s second-largest carrier, with 9.6 million.
“China Mobile may think Pakistan is a good place to start” its international investments, said Francis Cheung, an analyst at CLSA Ltd. “The money is a drop in the bucket for China Mobile.” China Mobile has cash and cash equivalent of 71.4 billion yuan ($9.2 billion) as of June 30, according to its interim report.
