Orascom Telecom finalizes long-awaited Telecel divestiture
Orascom Telecom Holding S.A.E. (OTH), the leading GSM Mobile and internet services operator in the Middle East, Africa and Pakistan, has finalized the long-awaited divestiture of part of its sub-Saharan subsidiary Telecel International Limited (ITL)'s assets.
The sales of seven GSM (Global System for Mobile Communication) companies in Sub-Saharan Africa from Telecel International Limited (TIL) have taken place in two separate transactions.
The first transaction transfers Telecel Gabon, Telecel Benin, Telecel Togo, Telecel Niger and Telecel Burkina Faso to Atlantique Telecom, a wholly-owned subsidiary of Banque Atlantique of the Ivory Coast.
The total cash component of the transaction is $23.1 million including deferred consideration for the five subsidiaries. At the same time consolidated net debt is reduced in TIL and consequently OTH by approximately $81 million. The initial closing took place with the transfer of shares in Telecel Gabon, Telecel Benin, and Telecel Niger.
The shares in the two remaining companies, still subject to final third party consents, will be transferred together with the residual consideration. The year-end TIL accounts will reflect the transfer of Telecel Gabon and Telecel Benin, removing $46 million of net debt, while the remaining transfers are expected to be reflected in TILs Second Quarter 2003 accounts.
The second transaction transfers Telecel Zambia, U-Com (holding company for Uganda
Telecommunications Limited), Telecel Burundi, Telecel Central African Republic and Telecel PTY (a management company based in South Africa) to the Gloria Trust, the previous minority shareholder in TIL.
Gloria Trust also transferred its 26.5 percent ownership in TIL as well as $27 million in loan forgiveness and 7.5 million OTH GDRs. Furthermore, this transaction gives OTH 100 percent ownership over TIL whose assets include 52.5 percent of Loteny Telecom in Ivory Coast, 100 percent of X-COM in the Democratic Republic of Congo (DRC), 60 percent of Telecel Zimbabwe and 100 percent of M-Link, an international carrier based in Belgium.
This transaction reduces net debt of TIL by $47 million and will be reflected on OTH financials in the year end 2002 accounts. In parallel with these transactions TIL has come to an agreement with its largest creditor, Siemens, to consent to the sales and to restructure the remaining debt it holds in TIL subsidiaries.
Over the course of the past year, despite operating in a very difficult political and economic situation in Ivory Coast, Loteny Telecom continues its fast growth in subscribers and EBITDA 47 percent and 23.6 percent respectively in comparison to 2001. Loteny Telecom has approximately 500,000 subscribers, and an EBITDA margin of 32.78 percent as at 31 December 2002.
TIL had at the end of 2002, 694,000 subscribers, an EBITDA Margin of 28.6 percent, and $198 million net debt (compared to $290 million prior to the sales). These figures do not as of yet reflect the full extent of the financial restructuring which is expected to reduce net debt by a further $75 million by year-end 2003.
The above transactions allow OTH to retain the majority of TILs value with self sustaining assets while at the same time shedding debt and ongoing financial obligations, consistent with OTHs overall restructuring strategy.
In addition to operating the remaining GSM assets, TIL will maintain its operating expertise to provide technical assistance to the buyers of the transferred GSM assets. All of the transferred and maintained operations will continue to use Telecels brand and trademarks. Starting mid 2003 TIL headquarters will be transferred to Cairo, Egypt. — (menareport.com)
© 2003 Mena Report (www.menareport.com)