MENA telecom valuations face a reality check
Not so long ago, $1.08 billion was paid by the Medi Telecom consortium, led by the Spanish Telefonica, for Morocco’s second GSM license. According to Ahmed Naser, an analyst at the Arab Advisors Group (AAG), the end of such exuberance in MENA region telecom markets is drawing near with the latest Moroccan deal signed for the purchase of a 35 percent stake in Maroc Telecom by French Vivendi.
According to the terms of the deal, announced December 22, Vivendi Universal will pay $2.11 billion for the stake in Maroc Telecom, Morocco's sole fixed services provider who also operates a GSM network that competes with Medi Telecom.
The deal puts the market value of Maroc Telecom at $ 6.04 billion, which is around five times the year 2000 revenues of almost $1.19 billion, and less than ten times year 2000 EBITDA (Earnings before Interest, Taxes, Depreciation and Amortization).
The report stresses that Vivendi's stake in Maroc Telecom is yet another example of the strong interest of French operators to enter the Arab World's markets. Prior to Vivendi's entrance, France Telecom setup shop in Jordan, Egypt, and Lebanon.
France Telecom's earlier attempt to enter Morocco failed after Medi Telecom won the bid for the North African state's second GSM license. With Vivendi in Morocco, French operators now have substantial presence in all Arab countries that have introduced a level of liberalization in their telecommunication markets.
This latest deal is part of the partial privatization program of the national telecom operator overseen by the Moroccan Telecom regulator, ANRT (Agence Nationale de Reglemention des Telecommunications). The AAG report expresses optimism in the fact that the partial divestiture of the Moroccan government from Maroc Telecom will increase the government's incentive to push through with its liberalization agenda, as it will be less likely to "favor" one operator in the market.
AAG deems it very probable that the liberalization timeline in Morocco, as set by the regulator, will be achieved. Accordingly, AAG anticipates the licensing of a second data-communication operator by 2002, a second fixed operator after 2002 and a third GSM operator after 2003.
Cellular penetration rate in Morocco rose from 0.05 percent in 1994 to 1.34 percent in 1999, bringing the number of subscribers to 375,000 subscribers. The figure has increased exponentially within less than a year of Medi Telecom's launch of full service in April 2000, bringing the number of subscribers to an astounding 2.5 million subscribers (a 568 percent increase of 2.12 million).
According to AAG estimates, Maroc Telecom holds an 80 percent market share of the GSM market, while Medi Telecom has the remaining 20 percent. ¯ (Albawaba-MEBG)
© 2001 Mena Report (www.menareport.com)