Asiacell Seeks $1.3 Billion in Top Mideast IPO Since 2008

Asiacell Communications PJSC, the Iraqi telecom operator majority-owned by Qatar Telecom QSC, plans to raise 1.49 trillion dinars ($1.3 billion) in the Middle East’s biggest initial public offering in more than four years.

Some of Asiacell’s founding shareholders will offer 67.503 billion shares, or 25 percent of its equity, at a minimum of 22 dinars a share, the Sulaymaniyah-based company said in an e-mailed statement today. The offer opens on Jan. 3 and closes on Feb. 2 and is open to all individuals and institutions with a trading account in Iraq, according to the statement.

Asiacell’s Baghdad IPO will be the biggest in the Middle East and North Africa since Saudi Arabian Mining Co., or Maaden, raised $2.5 billion in Riyadh in June 2008, according to data compiled by Bloomberg. Asiacell obtained a 15-year mobile telecommunications license in 2007 and had 43 percent market share by revenue at the end of September with 9.9 million individual and corporate subscribers, it said in the statement.

“Based on our estimates, the stock will IPO at roughly 9.7 times 2012 earnings,” Geoffrey Batt, who manages the $39 million Euphrates Iraq Fund, said in an e-mail from New York today. “It’s not cheap enough to keep people up at night, and the sellers probably think they’re leaving money on the table.”

Doha-based Qatar Telecom, known as Qtel, agreed this year to double its stake in the Iraqi mobile-telephone operator to 60 percent for $1.47 billion. Qtel, which owns stakes in companies from Tunisia to Indonesia, has sought to grow outside its home market, where it faces competition from Vodafone Qatar.

‘Growing Business’

Asiacell, which mainly offers prepaid mobile phone services, had net income of 474 billion dinars in the nine months through September compared with 505 billion dinars in 2011, according to the statement. Revenue was 1.56 trillion dinars compared to 1.84 trillion dinars, respectively.

“We’ve built a stable and growing business across Iraq,” Faruk Rasool, Asiacell’s managing director, said in the statement. “Iraq’s mobile industry continues to grow and we look forward to welcoming a new set of investors in 2013.”

The 22-dinar offer price translates to a price-earnings multiple of about 11.8 based on the company’s 2011 earnings, according to Bloomberg calculations. Parent Qatar Telecom trades at a multiple of 9.74 to its 2011 earnings.

Asiacell shares will list on the Iraq Stock Exchange on Feb. 3, according to the statement. Rabee Securities, a local brokerage, is the sole distributor of the offer, while Melak Iraq is the financial adviser to Asiacell on the sale.

Mideast IPOs

The MENA region’s IPO pipeline may be improving after Saudi companies helped the region more than double sales this year to $2 billion, Ernst & Young International said Dec. 23. Share sales in the region gained from $844 million in 2011 “hinting that the markets are inching towards better results,” it said.

“Asiacell, arguably, is the best of the three Iraqi mobile telecoms, and local money could view it as a prize asset,” Batt said. “If regional demand supplements local buying, then I’d wager there’s a good chance the IPO is fully subscribed by the end of January.”

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