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Mon 17 Sep 2012 05:11 PM

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Bahrain's Batelco eyes $1bn Monaco deal

Telco in talks with Cable & Wireless to buy its assets in Monaco, island nations

Bahrain's Batelco eyes $1bn Monaco deal
(Photo for illustrative purposes only)

Bahrain Telecommunications Co is in talks with Cable & Wireless Communications to buy its assets in Monaco and a host of island nations, a deal potentially worth around $1bn, three banking and industry sources said.

Batelco, whose move to buy a stake in Zain Saudi collapsed last year, is circling the Monaco & Islands portfolio of CWC, the British telecoms group operating in the Caribbean and formed through a demerger of Cable & Wireless in 2010.

Batelco and CWC confirmed the
talks in separate statements, saying there was no guarantee a deal would be
reached.

BNP Paribas and Citigroup are advising Batelco on the transaction, while JP Morgan Chase is advising the seller, two of the banking sources said.

Citi is leading financing efforts for the transaction, according to one banker.

"Batelco has been keen to do a deal for a while now to address falling home revenue. A potential deal to buy CWC assets should give them presence in markets they are not in currently," one the sources said.

Batelco and CWC both declined to comment.

Monaco & Islands operates in 12 markets, including the Maldives, Seychelles and Falkland Islands, and offers fixed-line, mobile, broadband and television services. Its brands include Monaco Telecom, Dhiraagu in the Maldives, and Sure in Britain's Channel Islands and Isle of Man.

Monaco Telecom also holds a 36.8 percent stake in Roshan, a mobile phone operator in Afghanistan.

The CWC unit generated $586m revenue in the group's 2011/12 year when it had earnings before interest, dividend, tax and amortisation of $186m, according to its website.

Monaco & Islands had 543,000 mobile subscribers as of end-March and 125,000 fixed-line subscribers.

Batelco aims to make at least one acquisition in 2012 to offset falling domestic revenue, its chief executive told Reuters in April.

It had cash and bank balances of $286m, according to its 2011 annual report, and could leverage its balance sheet to $1bn or more for acquisitions, the CEO said.

The company teamed up with Saudi group Kingdom Holding to buy a 25 percent stake in Zain Saudi last year but the deal failed due to disagreements with the indebted Saudi telco's banks.

Batelco owns Jordanian telecoms operator Umniah. It holds 27 percent of Yemeni mobile operator Sabafon, minority stakes in internet providers in Kuwait and Saudi Arabia and is also active in Egypt.

CWC, which had to cope with a faster-than-expected shift from voice services data, halved its dividend in May and said it was not seeing consistent recovery in the Caribbean.

Its shares have risen 30 percent in the past three months, narrowing year-to-date losses to 4.3 percent.

On July 3, European Union regulators cleared British mobile provider Vodafone's £1bn acquisition of fixed-line network operator Cable & Wireless Worldwide.

CWW, which split from CWC two years ago, provides voice, data and hosting services to British government departments and companies while its cables span the globe.

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