PARIS--French conglomerate Vivendi SA entered exclusive talks to
sell control of African phone operator Maroc Telecom to Emirates
Telecommunications Corp. for EUR4.2 billion ($5.5 billion), the
companies said Tuesday, kicking off a potential series of deals
that could reshape Vivendi as a smaller company focused on media
businesses.
Selling Maroc Telecom would be a crucial milestone in Vivendi's
broader effort to pay down a mountain of debt and get rid of its
telecommunications assets through sales or spinoffs. The strategy
would leave the Paris-based company as a much smaller entity
focused on businesses such as Universal Music Group and pay-TV
company Canal Plus.
Vivendi made the decision to move to exclusive talks with
Etisalat following a board meeting Monday, at which it was expected
to discuss the Maroc Telecom deal, as well as a potential dividend
for its videogame subsidiary Activision Blizzard, also aimed at
raising cash.
The cash deal under discussion with Emirates Telecommunications,
also known as Etisalat, values Vivendi's 53% stake in Maroc Telecom
at 92.6 Moroccan dirhams ($10.91) a share and Vivendi would receive
a total of EUR4.2 billion in cash for the stake, including EUR310
million in dividends for 2012, Vivendi and Etisalat each said in
statements.
Etisalat is the last remaining bidder for the stake in a process
that began last fall, but suitors dwindled in part because of high
price expectations by Vivendi and crawling talks with the Moroccan
government over the sale. In June, Qatar Telecom withdrew the
binding offer it submitted earlier in the year.
Talks had bogged down with the Moroccan government--which owns a
30% stake in the phone operator--over who would shoulder potential
future tax liabilities and the introduction of new minority
shareholders, according to people familiar with the matter. But
those concerns had been largely resolved in informal talks before
Tuesday's announcement, those people said.
Vivendi said in its statement Tuesday that discussions on a
possible investment in Maroc Telecom with a consortium of Moroccan
institutional investors would take place in "parallel" to the
Etisalat talks.
The initial term of the exclusive talks is two months, Etisalat
said in a statement. But Vivendi and Etisalat aim to seal the deal
before the end of this year, subject to the approval of the
Moroccan government and regulatory approvals in the countries where
Maroc Telecom operates, Vivendi said. Both Etisalat and Maroc
Telecom have operators in Gabon, for instance, which will lead to
an antitrust review there, according to people familiar with the
talks.
For Etisalat, the deal is a key part of an expansion effort.
Already present in 15 countries across the Middle East, Africa and
Asia, the Abu Dhabi-based company is facing strong competition in
its home market from rival Emirates Integrated Telecommunications
and has looked to its international operations to boost revenues in
recent years.
Etisalat has so far had mixed success in its ventures overseas,
effectively exiting the Indian and Indonesia markets last year. But
revenues from international operations were up 50% to 3.5 billion
U.A.E. dirhams ($952.7 million) in the second quarter, driven by a
strong performance in its Asia operations of Pakistan, Afghanistan
and Sri Lanka.
Vivendi was advised in its Etisalat talks by Lazard Ltd., a
spokesman for the investment bank said.
Write to Ruth Bender at ruth.bender@dowjones.com and Sam
Schechner at sam.schechner@wsj.com
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