France Telecom (FT) is weeks away from acquiring a 51 per cent stake in Iraq’s Korek Telecoms, after delegates from FT visited the Kurdish capital Irbil to sign the agreement in the week beginning 13 December. The deal has yet to be finalised, but the due diligence process is set to begin before the new year.
France Telecom had initially offered $1.5bn, according to sources familiar to the talks. It is investing with Kuwaiti logistics company Agility.
“We can confirm an active interest in Iraq, but cannot confirm anything else at the moment,” says a spokesperson from FT.
South Africa’s MTN was also in the running to acquire a minority stake in the Iraqi mobile operator. MTN was offering $1.2-1.3bn. The company issued the following statement: “MTN will not comment on any specific corporate activity. The Group is still committed to its vision of finding value-enhancing opportunities in emerging markets.”
Korek chief executive officer, Humam Amara, previously stated that the company was willing to sell a 35-49 per cent stake with shared management. The exact terms FT has agreed to remains unclear at this stage, but it is believed that FT will be a management partner with Agility.
One senior Iraqi ministry official believes Korek has made the right decision picking France Telecom. “FT has better knowledge and greater awareness of the Middle East market. It already has operations in Jordan, which is similar to Iraq, it will help FT and Korek,” says the official.
The deal will help FT’s ‘conquests 2015’ project, which aims to double revenue in its emerging markets mainly through acquisitions. The company has operations in Egypt, Tunisia, Jordan, Bahrain and Morocco. It has also placed a bid for Syria’s third mobile licence. FT has now withdrawn its bid for Iraq’s fourth mobile licence.
MTN was also one of 13 companies to have placed a bid for the fourth licence, which is expected to be issued in the first quarter of 2011. The operator has operations in 18 countries in the Middle East and Africa, including Syria, Iran and Sudan.
Iraq’s telecommunications industry is proving to be a lucrative emerging market with many global operators keen to gain access.
Qatar Telecom (Qtel), which owns a majority shareholding in Asiacell, Iraq’s second-largest mobile operator in terms of subscribers, is also planning to float its shares in 2012. Abu Dhabi’s Etisalat is keen to acquire Kuwait’s Zain in a bid to gain access to Iraq’s mobile market. Zain Iraq was valued at $6bn alone in the $12bn acquisition deal.
Korek Telecom was not available to comment.