November 5, 2013 10:25 am

Vivendi agrees €4.2bn deal with Etisalat for Maroc Telecom

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Vivendi has completed talks to sell its 53 per cent stake in Maroc Telecom to Etisalat of the United Arab Emirates in an all-cash deal worth €4.2bn.

The sale finalises an announcement first made in the summer as the heavily indebted French media and telecoms group sells assets to refocus its sprawling business interests on media and entertainment.

The Paris-based company, which started life as a water utility, has said that it would use the proceeds to pay down its net debt, which at the end of last year stood at €13.4bn.

Vivendi shares were trading at €18.69 by mid-morning, 0.1 per cent lower than the previous day’s close. The shares have gained 32.3 per cent since June 24, when they reached €14.13, their lowest point this year.

For Etisalat, which is 60 per cent owned by the Abu Dhabi government and operates in 15 countries across the Middle East, Africa and Asia, the deal will give it control over the largest wireless carrier in Morocco.

The Gulf’s biggest telecoms operator has struggled in recent years, as a multibillion-dollar foreign investment programme failed to translate into profits and tougher competition in all markets has squeezed profitability.

The deal with Vivendi comes two years after Etisalat abandoned talks to buy a $12bn majority stake in Zain, Kuwait’s biggest phone company.

Etisalat said the acquisition is subject to conditions including shareholders’ agreement with Morocco as well as competition and regulatory approvals.

For Vivendi, the sale is the first in a series of announcements made over the summer to recast Vivendi into a smaller but more coherent organisation.

In the same week that it announced the proposed Maroc Telecom sale, the French group said that it would sell its majority stake in Californian games company Activision Blizzard for $8.2bn.

Together, those deals mark the most significant steps since Vivendi vowed a “no taboos” shake-up of its business empire more than a year ago. Analysts said that the sales would leave the group financially healthier and based around Universal Music Group and Canal Plus, the French pay-TV channel.

Last month, Vivendi took full control of Canal Plus France from fellow French group Lagardère in a deal worth €1.02bn, ending a longstanding wrangle between the two partners.

Confirmation of the sale should come as some relief to Vivendi investors, many of whom had grown impatient with the apparent lack of headway in its plan to downsize.

“This was widely expected but it removes an uncertainty and every time that happens you have to be happy,” said Claudio Aspesi, a media analyst at Bernstein. “It has been a long and painful process.”

Last year, the group tried to sell its GVT Brazilian telecoms business but suspended efforts in March this year after failing to attract offers for its asking price of €8bn.

Following changes to the board in September, which saw Vincent Bolloré, the French industrialist and the group’s biggest shareholder, appointed to vice-chairman, Vivendi said it would keep GVT but would look to spin off SFR, its French telecoms unit.

A final decision on SFR is likely to come by the start of next year. It would then be put to a vote by shareholders.

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