DOHA/DUBAI, Aug 16, (RTRS): Qatar Telecom (Qtel) is offering $2.2 billion to buy the remaining 47.5 percent stake it does not already own in Kuwaiti telecom company Wataniya as the state-owned operator eyes acquisitions to ward off threats from rivals.
The former state monopoly, which already owns 52.5 percent of Wataniya, will pay 2.6 dinars per share, an 18 percent premium to Wataniya’s last traded price, through a tender offer open to shareholders.
Qtel has been raising stakes in its subsidiaries, taking advantage of the gas-rich Gulf state’s healthy financial position at a time when other large telecom firms are shying away from deals.
Transaction
The company has received approval for the transaction from the Gulf state’s market regulator, Capital Markets Authority (CMA), it said in a statement on Thursday.
Shares in Qtel rose 0.5 percent at 0815 GMT and are up 12 percent year-to-date.
“Increased competition and pressures on the industry from new entrants as well as incumbents will most likely erode value over time and require increasingly dynamic responses,” Qtel Chairman Sheikh Abdullah Bin Mohammed Bin Saud al-Thani said.
In June, Qtel agreed to double its stake in Iraq’s No. 2 operator Asiacell to 60 percent for $1.47 billion, seeking to exploit rising demand for broadband.
Qtel also owns a majority stake in Omani telecom operator Nawras. It bought its existing Wataniya stake in 2007 for about $3.7 billion.
Before they were halted when Qtel submitted its initial offer, Wataniya shares were trading at around 2008 levels, below some analysts’ targets, weighed by political turbulence that has dragged the Kuwait bourse to an eight-year low.
Price
Investors were failing to take account of revenue growth prospects, high cash flow and low debt, analysts said, giving Qtel the chance to be the first full owner of a listed Gulf telecoms operator — possibly at a knockdown price.
The next major hurdle for Qtel is gaining the assent of Kuwait Investment Authority, the Gulf state’s sovereign wealth fund, which has a 23.5 percent stake in Wataniya.
The fund is yet to decide whether to tender its Wataniya stake to the offer, a source familiar with the matter said.
“The KIA stake is going to be key as the fund owns a similar stake in other telcos in Kuwait, including Zain,” a second source said, adding: “if they sell Wataniya, does that mean they will be willing sellers of the rest? We will have to wait and see.”
In 2010, when UAE telecom company Etisalat bid around $12 billion to take control of Kuwait’s Zain, the sovereign fund was not willing to sell its holding, the source said, declining to be identified as the matter is not public.
Etisalat eventually pulled its bid, citing several reasons including a divided Zain board.
Meanwhile, Shares in Kuwaiti telco Wataniya will resume trading on Aug. 22, a bourse statement said on Thursday, after Qatar Telecom offered $2.2 billion to buy the remaining shares it does not own in the firm.
Shares in Wataniya have been suspended since late-June, when Qtel, which already controls 52.5 percent of the firm, said it had lodged an offer for the rest of the company.
Details of the offer — Qtel is offering 2.6 dinars per share, valuing the outstanding holding at 622.4 million dinars ($2.2 billion) — were announced on Thursday.
The offer is a 22.6-percent premium to Wataniya’s share price on June 21, the day it lodged the offer with Kuwait’s regulator. Based on Wataniya’s last traded price of 2.2 dinars on June 25, the offer represents a premium of 18 percent.
Shares in Qtel closed up 3.3 percent on the Doha bourse Thursday following announcement of the offer.