PARIS Qatar-backed telecom group Ooredoo QTEL.QA has withdrawn its bid for Vivendi's 53 percent stake in Maroc Telecom (IAM.CS), leaving rival Gulf operator Etisalat ETEL.AD as the remaining bidder.
The sale of Morocco's biggest fixed and mobile telecom operator is an essential part of Vivendi's year-old strategy revamp to reduce its presence in telecoms and focus more on its media businesses.
Talks between Vivendi and Etisalat are advancing well, said two people familiar with the situation.
"A final announcement could be made in the coming weeks as Etisalat has agreed to remove some legal conditions that were hampering its bid," one of the people said.
Shares in Vivendi fell after Ooredoo's announcement and were down as much as 3 percent before recovering some ground, but they were still the biggest loser on the French blue-chip index .FCHI at 10:47 a.m. ET.
"The two reasons we pulled out were valuation and frustration with the process," Jeremy Sell, Ooredoo's chief strategy officer said.
Sources told Reuters in May that Etisalat's bid was higher than Ooredoo's, though it contained more conditions and needed more work than the Qatari bid.
The stake is worth 4.2 billion euros at current valuations. Maroc Telecom shares stood at 98.7 dirhams on Friday.
A third person familiar with the situation said Vivendi had indicated that it was seeking a price at or above recent market prices. The 50-day moving average for Maroc Telecom shares is 107.5 dirhams.
Ooredoo's withdrawal ends a battle between two of the largest Middle East telecom operators for a prize asset that would have boosted both of their footprints in north and sub-Saharan Africa.
Maroc Telecom offers fixed-line, mobile and Internet services in the kingdom and is one of Africa's top telecom firms, with units in Burkina Faso, Gabon, Mali and Mauritania.
The buyer will inherit a firm that has been a reliable cash machine for Vivendi but has seen slower growth in recent years, analysts say, although there is growth potential in sub-Saharan Africa, where sales and profits rose last year.
"Although Maroc Telecom represents a good fit for our global portfolio, it is no longer in the best interests of our shareholders to continue to commit capital to what has become a lengthy process," said Ooredoo's Chief Executive Officer Nasser Marafih in a statement.
"We are thus withdrawing our offer and we will focus our attention on generating value in other opportunities across our global footprint through organic and acquisitive strategies."
Ooredoo is one of 11 telcos bidding for a mobile license in Myanmar, one of the last major untapped mobile markets.
(Reporting by Leila Abboud; Editing by Erica Billingham)