Merger and acquisition deals hold great potential for MENA telecom

Dominic Lowndes, the Editor of Telecom Deal Alert, and organiser of TMT Finance Middle East 2010 outlined that MENA telecom merger and acquisition deals in 2010 have the potential to breach the US$30bn mark. However, this is subject to the successful sale of Zain Africa. These potential deals are being discussed among the investment community in MENA in advance of the leading industry event, TMT Finance Middle East 2010 Conference & Awards in Doha.

Lowndes said, “There is a range of telecom assets worth up to US$30bn being considered for sale in the MENA region alone, and plenty of aggressive buyers from the Gulf and Asia with the appetite and the capital to make the deals happen. Although uncertain price levels caused by wider market volatility could still delay deals, there is the potential for a steady rise in activity through 2010.”

Representatives at the yearly telecoms event, consisting of CEOs from Middle Eastern and Asian telcos, heads of TMT from investment banks, law firms and private equity firms and also specialist advisers operating in the region, heard that the sale of Zain Africa is currently expected to reach US$9bn. This would then serve as a catalyst to further deal flow if it completes.

Zain Africa has been preoccupying many of the major acquirers in the market due to its significant, high quality portfolio of African telecom assets. This is acting as a deterrent on deal flow currently, according to Lowndes, as other players had been refraining from making a move while it is still available.

According to Lowndes, other potentially interested acquirers are moving towards other targets as the deal progresses with Bharti. Active buyers include Etisalat, China Mobile, Essar, Reliance, France Telecom, Qtel, Batelco, Singtel, Vodafone and STC. It is the Middle East and Indian operators that have the appetite for the larger deals. Infrastructure investors American Tower Corp, Eaton Telecom and Helios Towers are also seeking more acquisitions.

“Divestiture of infrastructure assets will dominate, with a handful of Middle East and Asian telcos continuing to lead consolidation. They have the cash, the balance sheets, and the appetite for deals, whilst European and US based telcos just do not have the appetite,” commented Lowndes.

Difficulties arise with the issue of raising funds through traditional means, for example, debt and equity financing, along with downward pressures on revenues and profits for telcos in many markets is forcing more companies to consider asset sales.

Further details about the finance conference and information about booking a place can be found at www.tmtfinance.com/me/register

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