Vivendi in Maroc Telecom takeover bid

6 May 2003

Less than a week after signalling its intention to refocus on telecoms in 2003 and dispose of its entertainment portfolio, Vivendi Universal [NYSE: V] has made a move to take control of Moroccan incumbent PTO Maroc Telecom. France-based Vivendi is believed to be ready to pay EUR690 million (USD775 million) to up its 35% holding to 51%, after abandoning earlier plans to offload the Moroccan operator; plans to sell Maroc Telecom were thwarted after initial offers failed to meet its price expectations. The French media and telecoms conglomerate is now likely to exercise a put option given by the Moroccan government in September requiring it to acquire a further 16% of the company. However, some have suggested that the move is merely a vehicle to enable Vivendi to dispose of the company later. Under the current ownership structure selling Maroc has proved difficult as bidders have been reluctant to pay for the additional put option. Other interested parties for Maroc, including Saudi-based entrepreneur Prince AlWaleed, have requested that Vivendi clarify its position with regards any deal. Although the prince is confirmed to have held talks, negotiations have stalled due to Vivendi’s price requirements and its apparent new-found desire to remain in the telecoms sector.

Maroc Telecom (formerly Itissalat Al Maghrib) is the state-owned telecoms operator of Morocco which was formed in February 1998 following the separation of the national posts and telecoms company ONPT. It had a monopoly on the provision of fixed line telephony until 1 January 2002 at which date the market was fully liberalised, although it remains the country’s dominant operator with around 1.19 million fixed line subscribers – a figure which has levelled off following a 1.5 million high in 1999. In 2002 Maroc Telecom’s revenues increased to EUR1.49 billion, a 10% rise year-on-year, and its mobile customer base grew by 934,000 to approximately 4.6 million customers giving the company a 70% share of the wireless market; fixed line revenues increased by 1%. Maroc Telecom faces competition in the mobile telephony market from the Medi Telecom consortium comprising Telefónica, Portugal Telecom, local bank Groupe BMCE and industrial company Afriquia.

Morocco,

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