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TELECOM DEAL

Morocco wants Etisalat to include local partner

Paris, July 10, 2013

Morocco wants UAE telecom operator Etisalat to take on a local partner as a condition of backing its bid for a 53 percent stake in Maroc Telecom, three sources familiar with the matter said.
 
French company Vivendi, which wants to sell its controlling stake in the kingdom's biggest mobile and fixed communications provider, needs the state to approve the buyer.
 
The government, which owns 30 percent of Maroc Telecom, wants to ensure that the new owner of the country's largest employer invests heavily in broadband and mobile infrastructure needed for the economy.
 
Its demand for Etisalat to find a local partner is slowing the deal's progress, but is not expected to derail it completely. Etisalat would retain majority control and consolidate the business on its books, and is not opposed in principle to having a minority shareholder, two of the people said.
 
France's Vivendi and Etisalat have been negotiating the deal since late April when the UAE company submitted an offer, which the seller chose over a lower bid from Qatar-backed Ooredo.
 
"Morocco would like to be able to rely on another solid Moroccan partner that could eventually become the voice of Morocco within the company's board," said one source who asked not to be identified because the deal negotiations are private.
 
The final deal structure is still being hammered out and it remains to be seen who the local investor will be, the people said.
 
The local partner would not buy part of Vivendi's 53 percent stake, but could buy the 17 percent of Maroc Telecom that is floated on the stock exchange or part of the government's 30 percent stake. Under Moroccan financial market rules, the buyer of Vivendi's stake would have to launch a bid for the minority shareholders in any case.
 
One possible candidate would be Morocco's Caisse de Depot et de Gestion (CDG), which is a public bank charged with holding national savings and investing in the economy.
 
"CDG seems the most logical player because they have the closest ties with the state and they also have the money," said the source. "There could be someone else too - it's not clear - but CDG will most likely lead the Moroccan consortium."
 
A spokesman for Vivendi declined to comment on Tuesday. Etisalat did not return a request for comment.
 
VIVENDI REVAMP
 
The sale of Maroc Telecom is crucial to Vivendi's year-old effort to remake itself by reducing exposure to the capital-intensive telecom business to focus more on its activities in video games, pay television, and music.
 
Vivendi needs the proceeds from the sale - which could total 4.1-4.5 billion euros, sources earlier told Reuters - to pay down debt to protect its credit rating and return money to shareholders eager to see progress on Vivendi's transformation.
 
Vivendi said in late April that it aimed to finalise the sale of Maroc Telecom by the autumn. "Three-way deals are always complicated, especially when one of the parties is a government," said a second source.
 
"There are hiccups here and there but overall the talks are going well, the person said. Vivendi and Etisalat could make an announcement by the end of the month, he said.
 
For Etisalat, buying Maroc Telecom would help it reduce reliance on its home market of the UAE by bolstering its operations in Africa. - Reuters



Tags: Morocco | Etisalat | Telecom | Maroc Telecom |

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