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Emirates Telecom says eyeing Omantel stake
DUBAI (Reuters) - Emirates Telecommunications Corp ETEL.AD (Etisalat) said it was interested in buying into and running state-controlled Oman Telecommunications Co OTL.OM (Omantel), which is preparing to court a long-term investor.
Omantel's stock surged 10 percent to a 21-month high on the news, the first public expression of interest in the operator since the government said on October 3 it would sell a stake in the company to make it more competitive overseas.
"Are we interested? I say yes," Jamal al-Jarwan, chief executive of Etisalat International Investments, told Reuters. "Oman is a growth market, and there are synergies for us in the Middle East."
Etisalat, the third largest Arab telecom operator by market value, has spent more than $6.5 billion on foreign acquisitions in the past three years and runs networks from Saudi Arabia to Pakistan.
It has also said it is interested in mobile phone licenses in Kuwait and Qatar, two other markets in which Omantel's domestic rival, Qatar Telecommunications Co. QTEL.QA (QTEL), runs networks. Qtel owns Omani mobile operator Nawras.
Jarwan said he expected the sale to include a contract to manage Omantel, although he declined to be drawn on how much Etisalat would consider investing.
The London-based Middle East Economic Digest reported last week that the Omani government could sell as much as 19 percent of the company immediately.
A 19 percent stake in Omantel would be worth $590 million at Wednesday's closing price of 1.693 Omani rials ($4.40).
HSBCE estimated the stock's fair value at 2.26 rials last week and recommended investors buy into Omantel, saying a long-term partner would increase the company's growth potential.
Omantel's stock has since surged more than 31 percent since October 3 when the government said it would cut royalties the company pays on revenue and shake up the management to prepare for a long-term investor.
Omantel is seeking to expand overseas after losing its mobile phone monopoly in 2005 and 40 percent of its market share to Nawras in the country of 2.5 million people.
The government owns 70 percent of Omantel and the rest is traded on the Omani exchange. It has not given any details about the sale process.
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