* In talks with Moroccan consortium on investment
* Hopes to complete talks by year-end
* Deal represents new growth push by Etisalat
* Vivendi shares up 3.6 percent
* Maroc Telecom shares fall 9.4 percent
By Christian Plumb and Dinesh Nair
PARIS/DUBAI, July 23 Vivendi SA's
long-flagged deal to sell its controlling stake in Maroc Telecom
to Abu Dhabi-based Etisalat is just the first step in the French
conglomerate's bet that it can remake itself as a media-focused
Vivendi said on Tuesday it had entered into exclusive talks
to sell its majority stake in Maroc Telecom to Etisalat
for 4.2 billion euros ($5.54 billion) in cash.
The deal, when finalised, would be the first major
divestment by Vivendi as part of its year-old strategy to reduce
exposure to capital-intensive telecoms to focus more on its
Vivendi's shares closed up 2.4 percent, while Etisalat
shares rose 1.27 percent on the Abu Dhabi bourse.
Vivendi had initially hoped to get as much as 5 billion
euros for the stake, but the lower price was seen as reasonable
given Maroc Telecom's lacklustre performance lately and the fact
that talks on the stake sale had dragged on for months.
"Despite the price disappointment (at a discount to the
closing price), the deal is good news for the group, allowing it
to begin its restructuring and the reduction of its debt ahead
of a possible spinoff of SFR," analysts at CM-CIC said in a
The deal also signals a new aggressiveness at Etisalat,
which had slowed down its pace of dealmaking after an aggressive
shopping spree that saw it spend about $12.6 billion on
acquisitions between 2004 and 2009.
Etisalat's Chief Strategy Officer Daniel Ritz said the Maroc
stake negotiations do not signal that the company was on a
The company is weighing a bid for Pakistan mobile operator
Warid Telecom, sources familiar with the matter told Reuters in
June. The UAE telco already owns a stake in Pakistan
"We will consider inorganic opportunities in areas where it
gives us a chance to consolidate our existing portfolio," Ritz
said, without specifying whether the company was bidding for
ACTIVISION, SFR IN FOCUS
The state-owned Abu Dhabi company's bid for Morocco's Maroc
Telecom is its first public approach for a foreign company since
a $12 billion bid for a controlling stake in Kuwait's Zain
failed two years ago.
Since then, the operator has overhauled management by
appointing a new chief executive and new heads of finance and
strategy with an apparent focus away from overseas forays that
failed to add much to the bottom line.
In many of those cases, Etisalat stumbled by not gaining
adequate control - still a potential risk with the Maroc Telecom
deal. Vivendi said earlier in the day that talks were underway
with a consortium of Moroccan investors for a possible
investment in Maroc without specifying the details of the
Ritz said the talks with Vivendi were for Etisalat to buy a
controlling stake in Maroc and that it was not in negotiations
with local Moroccan investors.
"Our position is very clear. We are in this deal, if we get
a controlling stake. We have heard there is interest among local
parties, but there are no negotiations happening now with any
parties," he said.
Morocco's state investment vehicle Caisse de Depot et de
Gestion (CDG) may team up with Etisalat in the latter's planned
purchase of a majority stake in Maroc Telecom, CDG's
chief executive said earlier in July.
In results released on Tuesday, Etisalat posted a 6 percent
year-on-year profit gain. It had reported declining earnings in
nine of the previous 13 quarters, with earnings greatly
influenced by foreign assets despite most of its revenue coming
from the UAE, where it competes with du.
The Maroc transaction ranks as one of the largest emerging
market deals this year. It coincides with an even bigger
European telecoms deal, the Dutch telecoms group KPN's 5 billion
euro deal to sell its German unit to competitor Telefonica
Vivendi is now widely expected to shift focus to finding
ways to pull cash out of its Activision Blizzard U.S.
video games unit, which it previously tried, but failed, to
sell. Another attempted sale, of Brazilian telecoms unit GVT,
was also pulled after offers lagged expectations.
It is also expected to consider a spin off of French
telecoms unit SFR, which it could eventually list through an
initial public offering.
SFR, which has been struggling with competition from upstart
operator Iliad, on Monday said it had entered into talks to
share part of its mobile network with Bouygues Telecom.
"These two moves mark the first concrete steps of the
restructuring programme - as such, we think they should drive a
re-rating as the market sees proof something is actually
happening," Liberum analyst Ian Whittaker said in a research
The Etisalat offer values Vivendi's 53 percent controlling
stake in Maroc Telecom at 92.6 Moroccan dirhams per share.
Shares in Maroc Telecom closed down 9.4 percent at 90.20 dirhams
The deal assigns an enterprise value to Vivendi's stake of
4.5 billion euros, equivalent to 6.2 times its earnings before
interest, taxes, depreciation and amortisation.
Vivendi and Etisalat have been negotiating since late April,
when the United Arab Emirates-based company submitted a binding
offer that was deemed more attractive than a lower, rival bid
from Qatar-backed Ooredoo.
The 4.2 billion price includes 300 million euros in 2012
dividends from Maroc Telecom due to be paid to a holding company
Etisalat is acquiring but which will instead be paid to Vivendi.
Vivendi is being advised by Credit Agricole and Lazard on
the sale and Etisalat by BNP Paribas and Attijariwafabank