Batelco to buy CWC assets in $ 1 bn deal

Updated 04 December 2012
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Batelco to buy CWC assets in $ 1 bn deal

DUBAI: Bahrain Telecommunications Co. (Batelco) has agreed to buy Cable & Wireless Communications’ assets in Monaco and some islands in a deal worth up to $ 1 billion, hoping growth overseas will offset falling revenue and market share at home.
Batelco, which has little debt, has reported falling profit in nine of the past 10 quarters and this slump has led it to expand abroad, although its moves had been limited to Middle Eastern countries like Jordan, Yemen, Saudi Arabia and Kuwait.
For CWC, the deal will allow it to cut debt and focus on a smaller geographical area.
Batelco will buy CWC’s Monaco and Islands division, which own stakes in telecom operators in 12 markets including the Maldives, Channel Islands and the Seychelles, providing fixed-line, mobile, broadband and television services.
It will also buy a 25-percent shareholding in Compagnie Monagesque de Communications (CMC), which holds CWC’s 55 percent interest in Monaco Telecom. Monaco Telecom in turn holds a 36.8 percent stake in Roshan, a mobile phone operator in Afghanistan.
The total price for these transactions is $ 680 million, Batelco said, adding it had appointed BNP Paribas and Citigroup to help it raise up to $ 1 billion though a bond issue and a loan facility.
“Batelco’s revenues and earnings are going down and the company is looking at cost reduction and restructuring to boost its margins,” said a Middle East telecom analyst. “Batelco wanted to buy brownfield operations (established businesses), it didn’t want new licenses, and there aren’t many available at the $ 1 billion ticket range.”
Reuters reported in September the two companies were in talks regarding the Monaco and islands assets. BNP and Citi were advising Batelco on the deal, the sources said.
Batelco, which has a market value of $ 1.53 billion according to Reuters data, also entered into option agreements which will allow the Bahraini firm to buy a controlling interest in CWC’s remaining 75-percent interest in CMC for an extra $ 345 million.
“We believe this is a good deal for CWC,” Esprito Santo Investment Bank wrote in a research note, claiming it provided a 40 percent premium to current valuations.
“A deal like this has been perceived as difficult to execute due to the geographic spread of the assets. We are now more confident in management’s ability to execute deals at good multiples.”
In a separate statement, CWC said the Batelco deal would cut its debt to $ 937 million. The operator is also in talks to sell a majority stake in Macau’s largest telecom group.
“Our strategy to expand in Central America and the Caribbean is predicated on really moving out of all aspect of the eastern part of our business, so Monaco and the Islands and Macau,” said CWC finance director Tim Pennington.
Batelco’s home revenue may be in decline — it fell 12 percent in the nine months to Sept. 30, accounting for 60 percent of group earnings — but it is buying a CWC division facing similar difficulties.
Monaco and Islands had revenue of $ 586 million in the year ending March 31, down from $ 605 million a year earlier. Earnings before interest, tax, depreciation and amortization (EBITDA) fell over the same period to $ 186 million from $ 207 million.
CWC’s effective stake in its Monaco and Islands division is about 65 percent, the Middle East telecoms analyst said, meaning Batelco will be working with local shareholders in the various units.
“The key question is whether this deal will add incremental value for shareholders,” added the analyst. “These new units may offer data revenue growth, but is the net earnings growing, and if yes, by how much?“


Abu Dhabi, Shanghai plan exchange focusing on China trade

Updated 24 April 2018
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Abu Dhabi, Shanghai plan exchange focusing on China trade

DUBAI: The emirate’s international financial center, has agreed in principle with the Shanghai Stock Exchange to cooperate in establishing an exchange focusing on China’s foreign trade and investment, ADGM said on Monday.
The partners signed a memorandum of understanding to develop the exchange in Abu Dhabi. It would cater to companies and investors involved in China’s Belt and Road initiative, a Beijing-backed drive to win trade and investment deals along routes linking China to Europe.
“At ADGM, we have the international platform to serve different kinds of enterprises and investors — global, regional and local — seeking exposure to the Middle East and North Africa and Belt and Road projects,” said Richard Teng, chief executive of ADGM’s Financial Services Regulatory Authority.
Teng said he could not give specifics of which instruments the new exchange would trade or when it might open, saying this would depend on demand among stakeholders in both ADGM and Shanghai.
Chinese financial institutions have approached ADGM to discuss the financial environment in Abu Dhabi and their development needs in the six-nation Gulf Cooperation Council (GCC), he added.
Trade and investment ties between China and the GCC have been growing rapidly. The region is a big oil supplier to China, and Sino-United Arab Emirates trade exceeded $46 billion in 2016, according to Beijing’s official Xinhua news agency.
Ultimately, the new exchange will support not only the Belt and Road initiative but also the internationalization of the Chinese yuan in the region, Teng said.
Abu Dhabi is trying to build up ADGM, which opened in October 2015 and is smaller than the international financial center in neighboring Dubai, as part of a drive to develop its economy beyond oil exports.