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December 3, 2012 9:19 am
Cable & Wireless Communications has agreed to sell most of its Monaco & Islands division for $680m, in a move by the telecoms provider to further focus on its Caribbean assets.
London-listed CWC on Monday agreed the sale of disparate operations spread across the Maldives, the Seychelles, the Channel Islands, and a 13.75 per cent indirect stake in Monaco Telecom to Batelco, the Bahrain telecoms group.
The sale includes a 25 per cent stake in Compagnie Monegasque de Communication (CMC), CWC’s holding company that owns a 55 per cent interest in Monaco Telecom.
CWC will, for the time being, keep control over Monaco Telecom, the telecoms provider to the tiny European principality.
But Batelco has a one-year option to buy the remaining 75 per cent of CMC – a move that will enable CWC to sell off its controlling stake in Monaco Telecom for an additional $345m, contingent upon regulatory approval.
The total sale price of $1.03bn represents a multiple of 6.7 times the proportionate earnings before interest, tax, depreciation and amortisation for the 12 months to the end of March 2012 from the businesses being sold.
“The sale is very much in line with our strategy and represents a very attractive multiple,” said Tim Pennington, CWC chief financial officer. “This represents the evolution of CWC into a more simplified telecoms group.”
CWC will use the proceeds to cut its net debt, which stood at $1.6bn at the end of September, and allow the group to pursue acquisitions of telecoms businesses in the Caribbean region.
CWC is already in talks to sell off its controlling stake in Macau’s largest telecoms group for as much as $800m to Citic Telecom International, part of the Chinese state-controlled conglomerate.
The talks to dispose of its lucrative Macau division were continuing, CWC said on Monday.
The largest of the businesses are in Monaco, the Maldives and Guernsey, which together accounted for 90 per cent of the $186m that the islands division made in earnings before interest, tax, depreciation and amortisation last year – a figure that was down from $207m in 2010.
Batelco’s interest comes as the company’s profitability and subscriber base declined in its domestic market of Bahrain, prompting it to look abroad.
The company’s net profit in the third quarter to September 30 more than halved year on year, as sales declined amid stiff competition at home.
“We have been pursuing a strategy of diversification and growth in order to create a more profitable and cash generative communications group,” said Sheikh Mohamed bin Isa al-Khalifa, Batelco chief executive.
Batelco will raise $1bn through a bond issue and loan to pay for the purchase and has hired Citigroup and BNP Paribas to raise the funds, it said.
CWC, which controls telecoms operators in many former European colonies, was created as an independent overseas telecoms business following the demerger from Cable & Wireless in 2010.
CWC shares rose 4.3 per cent to 36.2p in early afternoon trading.
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