CAIRO: A Qatar Telecom (Qtel) consortium has acquired Orascom Telecom Holding's (OT) 50 percent stake in Tunisian telecom operator Tunisiana, a share purchase agreement worth $1.2 billion. Tunisia's Princesse Holding and Qatar Telecom's (Qtel) subsidiary Wataniya Telecom acquired Orascom Telecom's entire shareholding in Orascom Tunisia Holdings and Carthage Consortium, two companies through which OT owns 50 percent of Tunisiana, the firms said in statements Monday. The deal is expected to be finalized by January 2, 2011, according to a Qtel statement. Naguib Sawiris, OT's executive chairman said in a statement, “This transaction is in line with our strategy to dispose of non-core assets to strengthen OTH's liquidity position and balance sheet and redeploy capital in our core markets.” He added, “Under the new International Accounting Standards (IFRS), OTH will not be able to proportionately consolidate Tunisiana in its financial results starting next year. The valuation realized is very attractive for a non-controlled asset.” Reuters cited sources “familiar” with the deal as saying that of the 50 stake, 75 percent will go to Wataniya, while Princesse Holding will obtain the remaining 25 percent. Kuwait's Wataniya will finance the purchase through a combination of cash and debt, and will additionally control the board and management of Tunisiana; thus, permitting Wataniya to fully consolidate its Tunisiana operations, Qtel explained. Qtel Group Chairman Sheikh Abdullah Bin Mohammed Bin Saud Al-Thani said, “The acquisition … aims to position us among the top 20 telecommunications companies in the world, and with our strategy of active portfolio development.” Qtel's chairman added that partnering with a local firm, such as Princesse Holding, would allow the operator to tap into their capacity and knowledge of the local business and regulatory environment. Amr Elalfy, director of research at Cairo-based investment firm CI Capital, told Daily News Egypt in a note that OTs decision was motivated by a need “to buy time so that it can seek international arbitration…with the Algerian government [over the sale of OTs Algerian subsidiary, DJezzy], and to finance any debt payments.” HC Brokerage, a Cairo-based investment firm, affirmed this view stating that: “OT is in need of cash given that cash outflows from Algeria are currently halted.” Weather Investments, OTs parent company, stated that the flush of capital would be used to “repay Orascom Telecom's outstanding indebtedness,” Reuters reported. Elalfy noted that OT has debt floating around $3.5 billion, excluding debt owned by its subsidiaries. “Rumors about the sale of Tunisiana have been circulating for a while, suggesting a value of $1.1 billion for Orascom Telecom's stake in Tunisiana. While the formal announcement has been made today, the news and the value was already out in the market,” HC Brokerage said. Asked whether the final agreement is fair for both OT and Qtel, Elafly said: “For OT, it solves its liquidity issues for the next two years, and for Qtel, it gives the firm full consolidation and full control over the operations.“ Following this latest news, Elalfy believes that deal will reflect positively on OTs stock value, but that the lingering dispute with the Algerian government over the sale of its Algerian subsidiary would “continue to blur the scene.” Qtel's move has been spurred as an attempt to stem losses incurred after Vodafone's UK unit entered the Qatari market, which has effectively corroded its monopoly, Reuters reported. Qtel is a telecommunications company with a presence in 17 countries, with more than 68 million customers.
