Etisalat seeks control of Maroc Telecom

Faced with stagnating revenues in West Africa, UAE’s Etisalat is hoping a majority stake in Morocco’s Maroc Telecom will invigorate growth there by creating a regional telecoms powerhouse with more than 25 million mobile subscribers, people familiar with the matter said.

Etisalat, which last month expressed an interest in French conglomerate Vivendi SA’s 53 per cent stake in Maroc, sees significant cost and revenue synergies between its operations across six African countries and Maroc’s subsidiaries in West Africa, the people, who didn’t want to be named because a deal is still being negotiated, said.

Etisalat is already present in Benin, Ivory Coast, Gabon, Niger, Central African Republic and Togo, while Maroc Telecom has subsidiaries in Mauritania, Burkina Faso, Mali and also Gabon. Maroc Telecom would manage the combined assets of the two companies in the region, the people familiar with Etisalat’s plans said.

“They see the synergy of the deal not in further optimisation in Maroc Telecom but in integrating their countries with the other countries for Maroc Telecom and creating this Francophone powerhouse along the coast of Western Africa,” said one person familiar with the matter.

Etisalat’s revenues have remained broadly flat across its African operations over the past four quarters and operating profits have been falling, even as subscribers have grown, according to its latest quarterly presentation to analysts. Capital expenditure has also been decreasing in the past year.

Across the Ivory Coast, Benin, Togo, Gabon, Niger, C.A.R., and two other African operations, Tanzania and Sudan, subscribers increased 29 per cent to 12.2 million in the fourth quarter compared with the same period earlier, while revenue remained flat at Dh709 million ($193 million).

Maroc Telecom, meanwhile, grew revenue by 18 per cent across its West Africa subsidiaries last year and increased operating profit margins from 40.2 per cent to 46.5 per cent as subscribers grew 32 per cent to nearly 13 million.

Etisalat submitted a preliminary expression of interest for the Maroc Telecom stake last month. France Telecom SA, Doha’s Qatar Telecom and Korean operator KT Corp have all also publicly expressed an interest as well.

Vivendi SA has been looking to sell its 53 per cent stake in Maroc Telecom since last summer, as part of a broader strategic shift of the company away from telecommunications and its media and content assets.