Thu, Dec 27, 2012 - Page 15 News List

South Korea’s KT makes play for Maroc Telecom

Bloomberg

KT Corp, South Korea’s second-largest mobile phone carrier, submitted a preliminary bid for Vivendi SA’s stake in Moroccan carrier Maroc Telecom SA as it aims to expand in Africa.

The bid, made on Dec. 17, is non binding, a spokeswoman for Seongnam-based KT, Kate Kim said by telephone yesterday.

Paris-based Vivendi is seeking to sell its 53 percent stake in Maroc for about 5.5 billion euros (US$7.3 billion), the Korean-language Economic Daily reported earlier.

KT is focusing on expanding into emerging markets including Central America and Africa after agreeing to sell its 80 percent stake in Russian carrier New Telephone Co the Korean company said last year.

KT shelved its plan to buy 20 percent of Telkom South Africa Ltd in June after the South African government opposed the sale.

“Since the Korean telecoms market seems highly saturated, KT has long been looking to expand its business overseas,” Choi Yun-mee, an analyst at Shinyoung Securities, said by telephone yesterday.

“Wired and wireless markets also seem excessively saturated in some developed countries, such as the US, and in Europe, so KT has no choice but to seek other opportunities in emerging markets such as Africa,” Choi said.

KT’s shares fell 1.5 percent to close at 37,500 won in Seoul trading, while South Korea’s benchmark KOSPI was little changed. The stock has gained 5.2 percent this year.

A price of 5.5 billion euros for Vivendi’s stake represents a premium of about 17 percent based on the 8.9 billion euro market value of Maroc’s Paris-listed shares.

That compares with an average premium of 27 percent in global telecoms deals of at least US$1 billion over the past five years, according to data compiled by Bloomberg.

Other potential bidders for Vivendi’s stake include France Telecom SA, Qatar’s Qtel and Etisalat, Reuters reported on Dec. 12. Vivendi has hired Lazard Ltd and Credit Agricole SA to explore a sale of Maroc, people familiar with the matter said.

Maroc, based in Rabat, Morocco, is 30 percent owned by the Moroccan government.

Morocco’s wireless market is saturated, with a penetration rate of 113 percent last year, Bloomberg Industries analyst Erhan Gurses said in a report on Oct. 8.

As a result, average revenue per user is declining and Maroc’s earnings may worsen Gurses said. Political risks in the West African nation are also likely to weigh on the stake sale, Gurses said.

Maroc’s revenue fell 1 percent to 15.2 billion dirhams (US$1.8 billion) in the first half of this year, the company said on July 24.

KT posted third-quarter profits that beat analyst estimates, from new subscribers to faster fourth-generation services and earnings from its leasing unit.

Net income rose 46 percent from a year earlier to 372.3 billion won (US$347 million), the company said on Nov. 5. That exceeded the 218.9 billion won average of 19 analyst estimates compiled by Bloomberg.

“KT reaped quite a large profit after selling its Russian telecoms stake, so it may have confidence in acquiring stakes in telecoms firms elsewhere,” Choi said.

Vivendi chairman Jean-Rene Fourtou has pledged to overhaul the Paris-based company and is considering divestments and restructuring to boost its stock.

Shares in the owner of major record label Universal Music Group and telecoms operators in France, Morocco and Brazil have gained 4.9 percent this year.

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