PARIS/LONDON Vivendi SA (VIV.PA) is exploring the sale of its stake in Morocco's largest telecoms company, sources familiar with the situation told Reuters, potentially raising around 4.2 billion euros ($5.5 billion) as part of a debt-cutting restructuring plan.
The sources said the diversified French company had contacted two investment banks to sound out potential buyers for the 53 percent stake in Maroc Telecom (IAM.CS), Vivendi's second-biggest profit earner.
Although Credit Agricole (CAGR.PA) and Lazard (LAZ.N) have not received a formal mandate for the sale, they have been asked to gauge appetite for the holding, the sources said, though the deal is expected to face hurdles given the political issues involved in the sale.
The Moroccan government, which holds a 30 percent stake, is the second-largest shareholder in Maroc Telecom, the largest-capitalized company on the Casablanca stock exchange.
"At this stage, banks are setting up meetings with management of potential buyers," said one of the sources. "Those who are interested will be introduced to the king of Morocco."
If any parties signal an interest, it is likely that talks will include the Moroccan government, which wants strong guarantees in terms of investment in the country, said one of the sources.
The two banks are expected to report back in November to Vivendi, which would prefer a cash payment for its stake, said one of the sources.
LIST OF ASSETS
The French conglomerate is reviewing its portfolio of businesses and strategy in a bid to cut its 14 billion euros debt mountain and revive its flagging shares.
Brazilian broadband specialist GVT has been seen as top of the list of assets to be sold. Vivendi earlier also hawked around its video games unit Activision (ATVI.O), but is believed to have put the sale on hold after bids were inadequate.
The Financial Times cited industry sources as saying Vivendi had received "highly preliminary" interest in its French telecoms business SFR.
Maroc Telecom, in which Vivendi first bought a stake in 2001, offers fixed-line, mobile and internet services, and is one of the main telecom operators in Africa with units in Burkina Faso, Gabon, Mali and Mauritania.
The business is Vivendi's second-biggest profit earner after French telecom operator SFR, but its growth has been stunted by strong competition in Morocco, its main source of revenue, despite good results in international markets.
Shares in Maroc Telecom closed almost 2 percent down in the Casablanca stock exchange in the first reaction to reports about Vivendi's intention to sell the stake.
"The 4 billion-euro figure offers an 8-percent discount on the share price of Maroc Telecom," a Casablanca-based trader said. "Maroc Telecom is no longer the cash cow it was the previous decade".
Analysts and bankers have cited Qatari operator QTel QTEL.QA and United Arab Emirates-based Etisalat ETEL.AD as two potential buyers for Maroc Telecom.
A deal with a Gulf Arab operator would make political sense for a country scrambling to compensate for declines in investment from the troubled euro zone.
"Who can find 4 billion euros amid this crisis? Gulf operators are the only ones who can," said another Moroccan trader, noting that Morocco's King Mohammed plans a rare official tour of Gulf Arab countries later this year, including Saudi Arabia.
Earlier this year, the monarch urged his cash-strapped government to tap Gulf sovereign wealth funds to help finance projects Rabat hopes will help it meet pressing social needs.
Etisalat's Managing Director Ahmad Julfar told Reuters in an interview in July that Morocco was an interesting market for the group.
QTel declined to comment, while Etisalat was not immediately available for comment.
South-African telecom operator MTN (MTNJ.J), however, is unlikely to take part in the talks for political reasons linked to Morocco's occupation of Western Sahara.
Other potential candidates could include Spain's Telefonica (TEF.MC) and France Telecom FTE.PA, which is already present in Morocco through its Meditel unit but could face competition issues in case of a bid for Maroc Telecom. ($1 = 0.7657 euros)
(Additional reporting by Christian Plumb in Paris, Souhail Karam in Rabat and Matthew Smith in Abu Dhabi; Writing by Elena Berton; Editing by Helen Massy-Beresford and David Holmes)