KT Makes Non-Binding Bid for Vivendi’s Maroc Telecom

KT Corp. (030200), South Korea’s second- largest mobile-phone carrier, submitted a preliminary bid for Vivendi (VIV) SA’s stake in Moroccan carrier Maroc Telecom SA (IAM) as it aims to expand in Africa.

The bid, made Dec. 17, is non-binding, Kate Kim, a spokeswoman for Seongnam-based KT, said by phone today. Paris- based Vivendi is seeking to sell its 53 percent stake in Maroc for about 5.5 billion euros ($7.3 billion), the Korean-language Economic Daily reported earlier.

KT is focusing on expanding in emerging markets including Central America and Africa after agreeing to sell its 80 percent stake in Russian carrier New Telephone Co., the Korean company said last year. KT shelved its plan to buy 20 percent of Telkom South Africa Ltd. in June after the South African government opposed the sale.

“Since the Korean telecom market seems highly saturated, KT has long been looking to expand its business overseas,” Choi Yun Mee, an analyst at Shinyoung Securities, said by phone today. “Wired and wireless markets also seem excessively saturated in some developed countries, such as the U.S. and Europe, so KT has no choice but to seek other opportunities in emerging markets like Africa.”

KT fell 1.5 percent to close at 37,500 won in Seoul trading, while South Korea’s benchmark Kospi index was little changed. The stock has gained 5.2 percent this year.

France Telecom

A price of 5.5 billion euros for Vivendi’s stake represents a premium of about 17 percent based on the 8.9 billion-euro market value of Maroc’s Paris-listed shares. That compares with an average premium of 27 percent in global telecom deals of at least $1 billion over the past five years, according to data compiled by Bloomberg.

Other potential bidders for Vivendi’s stake include France Telecom SA (FTE), Qatar’s Qtel, and Etisalat, Reuters reported Dec. 12. Vivendi has hired Lazard Ltd. (LAZ) and Credit Agricole SA (ACA) to explore a sale of Maroc, people familiar with the matter have said.

Maroc, based in Rabat, Morocco, is 30 percent owned by the Moroccan government, according to data compiled by Bloomberg.

Morocco’s wireless market is saturated, with a penetration rate of 113 percent in 2011, Bloomberg Industries analyst Erhan Gurses said in a report on Oct. 8. As a result, average revenue per user is declining and Maroc’s earnings may worsen, according to consensus estimates cited by Gurses. Political risks in the West African nation are also likely to weigh on the stake sale, Gurses wrote.

Maroc’s revenue fell 1 percent to 15.2 billion dirhams ($1.8 billion) in the first half of this year, the company said July 24.

KT’s Profit

KT posted third-quarter profit that beat analyst estimates on new subscribers to faster fourth-generation service and earnings from its leasing unit. Net income rose 46 percent from a year earlier to 372.3 billion won ($347 million), the company said Nov. 5. That exceeded the 218.9 billion-won average of 19 analyst estimates compiled by Bloomberg.

“KT reaped quite a big profit after selling its stake in Russian telecom, so it may have confidence in acquiring stakes in telecom firms elsewhere,” Shinyoung’s Choi said.

Vivendi Chairman Jean-Rene Fourtou has pledged to overhaul the Paris-based company and is considering divestments and restructuring to boost the stock. The owner of record company Universal Music Group and phone operators in France, Morocco and Brazil has gained 4.9 percent this year.

Brazil Unit

Vivendi has hired Rothschild and Deutsche Bank AG to study strategic options for its Brazilian phone operator GVT, two people familiar with the matter said in August. Vivendi may sell the company or a stake, or propose an initial public offering, one of the people said at the time. Vivendi acquired GVT for $4.18 billion in 2009.

France Telecom, the largest French phone company, is potentially interested in Maroc under “very numerous conditions” including price and any asset overlap, Chief Financial Officer Gervais Pellissier said this month.

Qtel is also looking “very closely” at Morocco, and a stake in Maroc “might be in play,” the Qatari company’s Chief Strategy Officer Jeremy Sell said Oct. 7.

Separately, KT filed a shelf registration today with Japan’s Finance Ministry allowing it to sell as much as 100 billion yen of Samurai bonds. The registration, which takes effect Jan. 8, is valid for two years.

To contact the reporter on this story: Jungah Lee in Seoul at jlee1361@bloomberg.net

To contact the editor responsible for this story: Anand Krishnamoorthy at anandk@bloomberg.net

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