Emirates Telecommunications Corp., (ETISALAT) the most valuable publicly traded company in the United Arab Emirates, agreed to sell businesses in six west African countries to Maroc Telecom as it combines assets before completing a $5.8 billion acquisition from Vivendi SA.
Today’s deal, valued at $650 million, includes units in Benin, Central African Republic, Gabon, Ivory Coast, Niger and Togo that provide mobile voice and data services, the Abu Dhabi-based company known as Etisalat said in a statement.
Etisalat agreed in November to acquire Vivendi’s 53 percent stake in Maroc Telecom in the Middle East’s largest takeover of a phone carrier. Putting the west African assets under Maroc Telecom would extend its reach beyond Morocco, Mauritania, Burkina Faso, Mali and Gabon. Etisalat also operates divisions in Egypt and Nigeria.
“It really makes sense they’re doing this,” said Sanyalaksna Manibhandu, an analyst at NBAD Securities in Abu Dhabi. “It’s a move to consolidate control of their west African assets as they obviously think Maroc Telecom can manage them better out of Casablanca better than they can out of the U.A.E.”
Etisalat rose 0.4 percent to 11.45 dirhams at 12:47 p.m. in Abu Dhabi.
The deal is subject to the completion of the Maroc Telecom acquisition, Etisalat said.
Etisalat last month signed a 3.15 billion-euro ($4.4 billion) deal with 17 banks to fund the acquisition of the Maroc Telecom stake. The transaction will be completed at the end of this month, according to Etisalat Chief Financial Officer Serkan Okandan.
In Africa, Etisalat’s revenue declined 1 percent to 700 million dirhams ($191 million) in the first quarter because of intensifying competition in the Ivory Coast and currency devaluation in Sudan, it said in its financial statements in April. Etisalat operates in 15 countries in the Middle East, Africa and Asia, according to its website.
At home, the company has lost market share to Emirates Integrated Telecommunications Co. (DU), also known as Du, after its monopoly over the U.A.E. market ended in 2007.
The sale of the West Africa assets also includes Prestige Telecom in the Ivory Coast, which provides IT services to the operations of Etisalat in these countries, Etisalat said in today’s statement.
“The final step now would be to announce the closure of the Maroc Telecom transaction,” said NBAD’s Manibhandu, who has an “accumulate” recommendation on the stock with a target price of 13.50 dirhams. “They are on course.”
For Paris-based Vivendi, selling its telecommunications assets is a key part of its plan to transform into a new entity built around music, pay-TV, European cinema and Internet in Brazil. Vivendi last month agreed to sell its French phone unit SFR to cable billionaire Patrick Drahi’s Altice SA in a $23 billion transaction.