The Wall Street Journal, by Sam Schechner (PARIS, France, June 14, 2013) — Vivendi SA VIV.FR -1.54% is in advanced talks to sell its controlling stake in African phone operator Maroc Telecom to Abu Dhabi-based Emirates Telecommunications Corp., people familiar with the matter said, after the only other rival bidder dropped out of the running Friday.
Vivendi and Emirates Telecommunications, also known as Etisalat, could enter exclusive negotiations over a sale of Vivendi’s 53% Maroc stake in coming days, one of those people added, though it is still possible the deal could fall apart.
An Etisalat spokesman said it had “taken note” of the other bidder’s decision to withdraw its bid and declined to comment further.
Selling Maroc Telecom is a lynchpin in Vivendi’s broader effort to get rid of its telecommunications assets and reshape itself as a smaller business focused on a lineup of media companies.
In particular, the Maroc deal would set up the company’s bigger ambition to spin off French telecommunications operator SFR by allowing the company to reduce debt, according to people familiar with the matter.
On Friday, Qatar Telecom, the only other remaining rival in a bidding process that has stretched months, said that it would yank its competing bid. “We just got frustrated,” Jeremy Sell, chief strategy officer for Qatar Telecom, also known as Ooredoo, said in a phone interview. “Last week, they gave us very firm guidance on the price and we said no way.”
People close to Ooredoo have been saying since mid May that their frustration has been growing over a process that lacked transparency, with Vivendi pushing for increased prices.
Both bidders—who submitted binding offers at the end of April—have also had to win approval from Morocco’s king, as the state owns a 30% stake in the phone operator.
As for Etisalat, it remains unclear if there is a gap on price between its bid and Vivendi’s expectation, though one of the people familiar with the matter said there were not many issues left that could derail talks.
Vivendi executives and board members have studied a plan that would split off French telecoms operator SFR from the company once it has sold off a chunk like Maroc Telecom and used the proceeds to pay down a significant amount of debt, according to people familiar with the deliberations.
Vivendi had €13.4 billion in net debt as of Dec. 31. In one structure under consideration, the company would actually spin out the assets other than SFR, leaving the bulk of the company’s remaining corporate debt with the French phone operator, those people said. But a decision has not yet been made, and any proceeds from Maroc could take until fall to hit Vivendi’s bank account, likely pushing a spinoff until at least early next year, one of those people added.
Vivendi has been has been looking to shed its telecommunications assets last summer since a strategic showdown between Chairman Jean-René Fourtou and then-chief executive Jean-Bernard Lévy pushed the latter—who supported the telecom business—out of the company.
The Maroc deal has taken on added importance as Vivendi has failed to pull off other potential transactions it could have used to pay down debt.