Vivendi Said to Target Maroc Telecom Stake Sale by October

Vivendi SA, the French company seeking to reorganize its telecommunications-to-media structure, is targeting a completion of the sale of its Maroc Telecom SA stake by October, according to people familiar with the matter.

While Vivendi wants as much as 5 billion euros ($6.5 billion) from the 53 percent holding, according to one person briefed on the matter, a more realistic target would be in the range of 4 billion euros to 4.5 billion euros, two other people with knowledge of the sale said. They declined to be identified because the process is private. Emirates Telecommunications Corp. and QSC Qatar Telecom submitted binding offers last week.

A deal would be a breakthrough for Paris-based Vivendi as it tries to refocus around media and content businesses. Chairman Jean-Rene Fourtou will meet shareholders tomorrow, a year after pledging a “no-taboo” strategic review. Attempts to sell Brazilian Internet operator GVT and a stake in game publisher Activision Blizzard Inc. have stalled on valuation differences or insufficient interest.

“More than anything, they need to show that they can execute on an asset sale at a reasonable price,” said Nuno Matias, an analyst a Banco Espirito Santo SA who recommends buying Vivendi shares. “Anything below market price would be a disappointment.”

Earnings Multiple

Maroc Telecom trades at 6.6 times projected 2013 earnings before interest, taxes, depreciation and amortization, according to data compiled by Bloomberg based on enterprise value, which includes debt. That compares with the median 5.2 times for carriers in Africa and the Middle East, the data show.

Emirates Telecommunications’s enterprise value is 4.3 times Ebitda, while the multiples at Safaricom Ltd. and Orascom Telecom Holding SAE are 5.3 and 3.6, respectively.

Vivendi shares fell 1.6 percent from its intraday level, and traded at 17.13 euros, or 0.7 percent higher, as of 3:24 p.m. in Paris. Maroc Telecom climbed 1.6 percent to 115 dirhams in Casablanca, valuing the 53 percent stake at $6.3 billion.

Fourtou, a 73-year-old Frenchman, is trying to show investors that momentum for a strategy revamp is still going strong at Vivendi. Since the ouster of Chief Executive Officer Jean-Bernard Levy last June, Vivendi’s stock has risen about 20 percent partly on optimism over the reorganization. Vivendi also owns Universal Music Group, pay-TV operator Canal Plus and French wireless carrier SFR.

Loan Terms

A Vivendi representative declined to comment on the sale of the Maroc Telecom stake, as did officials for Abu Dhabi-based Emirates Telecommunications and Doha-based Qatar Telecom, which operates under the brand name Ooredoo.

People with knowledge of the matter said this month that Emirates Telecommunications, better known as Etisalat, was setting terms of $8 billion of loans backing its bid. Etisalat is raising debt comprising a $4 billion portion to be refinanced by bonds, and three- and five-year loans, the people have said.

Even though the Maroc Telecom attracted two binding bids, a deal could still fall apart because Morocco’s government, which owns a 30 percent stake in the carrier, has to approve any transaction, the people said. Maroc Telecom also has investments in Gabon, Mauritania, Burkina Faso and Mali.

The carrier’s Ebitda will decline less than 1 percent to 16.6 billion dirhams this year from the 16.7 billion dirhams the company reported for 2012, according to the average of analyst estimates compiled by Bloomberg.

Vivendi’s largest telecommunications asset is French wireless operator SFR. Vivendi is considering splitting off SFR from the rest of the company, people familiar with knowledge of the discussions said last month.

“The sale of Maroc represents the first step of what should be an 18 to 24-month process, with other assets also primed to be either disposed or spun off,” Ian Whittaker, a Liberum Capital analyst, wrote in a note. “This should drive a re-rating.”

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