Dubai Holding mulls sale of phone retailer stake

Conglomerate considering sale of 26% stake in Axiom Telecom, according to sources
Dubai Holding mulls sale of phone retailer stake
Axiom Telecom CEO Faisal Al Bannai.
By Reuters
Tue 13 Mar 2012 06:29 PM

Dubai Holding, the conglomerate owned by the ruler of Dubai, is considering a sale of its remaining 26 percent stake in local mobile phone retailer Axiom Telecom, three sources familiar with the matter said.

A sale could fetch a price of $300m for Dubai Holding's unit Emirates International Telecommunications LLC (EIT), said a banking source speaking on condition of anonymity.

The holding company is in the process of nominating an adviser to evaluate options for the stake, two other sources said. Dubai Holding declined to comment.

Axiom chief executive Faisal Al Bannai declined to comment on the possibility of a Dubai Holding exit and only said: "Every shareholder at Axiom has the right to evaluate their stake and test the market. The company operates independently from any change in shareholding."

Dubai-based Axiom sold a 35 percent stake to Qatar's Mannai Corp for an undisclosed amount last year after deciding against a share listing.

This included a 14 percent stake from EIT.

Dubai Holding holds a substantial portfolio of brands in the property and hospitality sectors, organised under three main groupings: Dubai Holding Commercial Operations Group (DHCOG), Dubai International Capital and Dubai Group.

"Axiom is a valuable, noncore asset for DHCOG and we think they would be willing to sell down their remaining stake," said Gus Chehayeb, director of MENA Credit Research at Exotix.

"However, with minimal debt due prior to 2014 and lots of free cash flow from hospitality and retail properties, we think DHCOG will only sell its telecom assets at fair or attractive prices. That is, there is no rush to sell in our opinion, but there's always a right price," he added.

Dubai Holding, which repaid in full a $500m bond earlier this year, is among the matrix of firms badly hit by Dubai's 2009 financial crisis and most of its units have had to hold discussions with banks to extend liabilities and restructure debt.

Dubai Holding may have to sell its entire $2bn telecom portfolio over the next three years primarily to repay contractor liabilities, JP Morgan said in a note last July.

Dubai is slowly recovering from the impact of the financial crisis which saw property prices crash more than 50 percent in the emirate and forced it to restructure $25bn in debt at flagship conglomerate Dubai World.

Mohammad Al Shaibani, the chief executive of the Investment Corporation of Dubai, said last month that the emirate would make its debt payments this year and is willing to support state-owned companies through various options.

Government-related entities in Dubai have bonds worth $3.3bn maturing before the end of 2012, including a $1.25bn DIFC Investments (DIFCI) sukuk and a AED7.5bn sukuk ($2bn) for Jebel Ali Free Zone (JAFZA).

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