Bonds News

China Mobile to buy Paktel in first overseas deal

NEW YORK/LONDON, Jan 22 (Reuters) - China Mobile Communications Corp., the world’s biggest wireless carrier, agreed to buy money-losing Pakistan operator Paktel Ltd. for $284 million for its first acquisition outside its home market.

Beijing-based China Mobile is buying an 89 percent stake in Paktel from Millicom International Cellular S.A. MICC.O, a Luxembourg-based company that operates in emerging markets, the companies said on Sunday.

Millicom, which earlier this year held failed talks to be acquired by China Mobile, the parent of China Mobile (Hong Kong) Ltd. 0941.HK, has operations in 16 markets in Africa, Latin America and Asia.

China Mobile plans to rebrand and relaunch Paktel with additional investment in equipment and marketing, one person close to the situation said on Monday, in a bid to turn the company around and grab a larger slice of the growing market.

Paktel is the fifth-largest mobile operator in Pakistan with 1.5 million subscribers as of Sept. 30, a 62 percent rise from the year before. About one-quarter of Pakistan’s 160 million people have mobile phone service.

Millicom decided to exit the Pakistani market in November after it had gained additional space in the 1800 Mhz spectrum, but the grant was not permanent. Regulators also had refused a request to delay payment of a $29 million license installment.

Since then, about 10 entities expressed interest in Paktel, another source familiar with the deal told Reuters.

“The sale of Paktel allows Millicom to focus on the 16 markets where we have already established strong market positions and, with penetration rates rising rapidly, the prospects in these business is good,” Millicom Chief Executive Marc Beuls said in a statement.

Millicom expects the sale to be completed in late February, contingent on obtaining regulatory approvals.

The deal implies an enterprise value for Paktel of $460 million, the company said, exceeding most analysts’ estimates.

“This implies that Millicom now has more capital to use for further expansion,” SEB Enskilda analyst Lena Osterberg wrote in a Monday note to clients. “One scenario that again arises is that Millicom could enter Vietnam.”

Shares of Millicom on Friday closed at $67.65 on the Nasdaq, up 2.3 percent, after reaching a year high of $68.09 earlier in the day. The shares have more than doubled from their July 3 low of $31.71.

Lazard advised Millicom while CICC and Merrill Lynch advised China Mobile. (Additional reporting by Patrick Lannin in Stockholm)