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Sun 4 Dec 2011 02:47 PM

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Batelco eyes $300m tower sales in Bahrain, Jordan

State-backed telco plans sale and lease-back deal to raise funds for acquisitions

Batelco eyes $300m tower sales in Bahrain, Jordan
Batelco has eyed acquisitions to bolster its growth as domestic profits slide

Bahrain
Telecommunications (Batelco) is eyeing a sale and lease back deal for its tower
assets in Bahrain and Jordan, a banking source familiar with the matter said,
in a move that would raise funds for potential acquisitions.

Batelco,
which secured investment-grade ratings last month, has hired Citigroup to help
with the sale process, the banking source said speaking on condition of
anonymity. The deal may generate between $200m to $300m for the carrier, he
added.

A
formal bidding process is on and Batelco has received expressions of interest
from a few bidders, the source said.

A
Batelco executive said on Sunday the firm was looking at options to monetise
the tower operations in the two countries.

"We
are exploring all options to unlock value for our business and the towers is
one of those options, but we have not made a decision on whether to lease them
back or keep them - we are still going through the deliberations," said
Peter Kaliaropoulos, Batelco chief executive of strategic assignments.

"We
have no debt, so extra funds we derive -- should we proceed with monetising the
towers -- will go towards future acquisitions because it reduces the cost of
funding for us."

Batelco
has been keen for acquisitions to shore up growth after losing its monopoly in
the Gulf Arab island kingdom in 2003. Last year, it had a 37-percent share of
Bahrain's mobile subscribers and fierce domestic competition from units of
Kuwait's Zain and Saudi Telecom Co is pushing the operator to look abroad.

In
September, a joint consortium led by Kingdom Holding and Batelco scrapped a
$950m offer for a 25-percent stake in Zain Saudi.

Batelco
also has interests in Egypt, Jordan, Kuwait, India, Yemen and Saudi Arabia,
with these providing about a third of revenue in the first nine months of 2011.

Debt-free
Batelco had a cash and bank balance of $230m as of Sept 30 and may issue bonds
to raise financing for acquisitions after securing ratings from Fitch and Standard
& Poor's, analysts say.

In
a sale and lease back arrangement one party sells a property to a buyer who
immediately leases the property back to the seller. This allows the original
owner to make full use of the asset but have no capital tied up in the asset.

Saudi
rivals Mobily and Saudi Telecom plan to close a tower-sharing deal by year-end
to help the two carriers cut network maintenance costs in Saudi Arabia, in a
first for the Gulf Arab region.

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