Emirates Telecommunications (Etisalat), the UAE’s most valuable publicly-traded company, has agreed to purchase Vivendi’s 53% stake in Maroc Telecom for $5.7 billion, giving the company control over the largest wireless carrier in Morocco and a larger footprint in Sub-Saharan Africa.
The deal marks a return to acquisitions for Etisalat, and gives the firm access to Mauritania, Burkina Faso and Mali, in addition to the African countries where it is already present.
Maroc’s operations in West Africa, with the exception of Mauritania, performed strongly as mobile customer numbers grew from 11 to 33% during the first nine months of 2013, while Etisalat’s African operations made a net loss in the third quarter as its number of subscribers fell.
According to Reuters, Gulf Arab telecom operators like Etisalat and its Qatar-based rival Ooredoo, which withdrew its bid for Maroc, are avidly searching for businesses outside of their small, saturated home markets, where rising competition has pressured profitability.
While the sale of Maroc remains subject to regulatory approvals, Etisalat has proposed making Maroc Telecom the flagship of its African operations, deploying it across Africa.
“There seems to be a plan for Maroc to be the managing unit for all of Etisalat’s Sub-Saharan units,” Informa’s Matthew Reed told Reuters, referring to Etisalat operations in Côte D’Ivoire, Benin, Togo, Gabon, Niger and the Central African Republic, and Maroc’s regional success.
However, Reuters source Conor O’Shea at Kepler Capital Markets commented: “Vivendi is selling a business that is ex-growth, has declining margins and a shareholder set-up that is quite complicated. I would say this was a good sale rather than a good purchase.”
The Maroc deal will be Etisalat’s first big purchase this decade after spending about $12.6 billion on foreign acquisitions from 2004 to 2009 with mixed results.
The UAE carrier has operations in 15 countries, including most notably Nigeria in Africa, but for the moment its home market of the UAE still accounted for 65% of third-quarter revenue.
(Cover image: Maroc Telecom president Abdeslam Ahizoune)