April 25, 2014 12:59 pm

CWC offloads majority stake in Monaco Telecom to Xavier Niel

Cable and Wireless Communications has sold its majority stake in Monaco’s largest telecoms company for $445m to French billionaire Xavier Niel.

The UK-listed telecoms group confirmed the sale of 55 per cent of Monaco Telecom on Friday, which will be a personal investment for Mr Niel, rather than through Iliad or Free, the French telecoms businesses that he owns. The Financial Times first reported the news on Thursday.

Monaco Telecom is the principality’s main provider of mobile, fixed line, broadband and pay TV services. The $445m price represents a multiple of 8.4 times earnings before interest, tax, depreciation and amortisation based on results of the unit for the 12 months to March 31 2013.

Cable and Wireless Communications (CWC) acquired the stake in June 2004 for €162m.

The deal is expected to be completed in mid-May. Evercore, Akira Partners and JPMorgan advised CWC, Lazard advised Mr Niel and Perella Weinberg advised the Monaco government, which owns the remaining 45 per cent.

Those familiar with the process said that Mr Niel wanted to diversify his holdings away from Iliad, and was attracted by the principality’s wealthy population. Mr Niel was close to buying the Swiss business owned by Orange but was eventually outbid by Apax.

The deal almost completes the strategic review being carried out at CWC, which has sold off businesses round the world as part of a focus on the Caribbean and Central American region.

The deal will be the first major decision by chief executive Phil Bentley, who arrived from British Gas with a mandate to take the 140-year-old business into the next stage of its development.

CWC, which is in the process of moving its headquarters to Miami, has attempted once before to sell the business as part of a wider disposal of non-core operations to Batelco, the Bahraini group. However, the sale was blocked by the Monaco government.

The Monaco government was concerned about the political risk of having a Bahraini partner, according to one person with knowledge of the situation.

The principality helped lead the search for a new buyer given its strict requirements concerning the suitability of a partner. One person said that the government did not want short-term investors in private equity, for example. Other interested parties included Patrick Drahi, the rival French telecoms tycoon, according to the person.

CWC is not being forced to sell the business, but it remains non-core. Mr Bentley said: “As we concentrate our business on the Caribbean and Latin America, we have taken this opportunity to crystallise the value we have created.”

Espirito estimates that the transaction will bring net debt at CWC to $200m. There have been rumours that the group itself could be a takeover target for a larger international group such as Liberty Global or America Movil.

Cable and Wireless demerged into two companies in 2010 – Cable and Wireless Worldwide was taken over by UK rival Vodafone last year in a £1bn deal but CWC has remained listed in London.

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