The sale of 91.6 percent of Fastlink in Jordan, to Mobile Telecommunications Company (MTC) in Kuwait, values Fastlink at around $462.8 million. At a multiple of 1.61 estimated revenues of 2002, MTC seems to have gotten a very good deal. Orascom Telecom (OTH)’s dire need for cash to finance its new operations in Algeria and Tunisia was the biggest reason for the sale.
“Fastlink was Orascom Telecom’s (OTH) crown jewel. It was amongst the highest revenue-generating subsidiary for OTH. However, the weary financial position of the operator has come to make the sale of Fastlink the most rational solution to ease its burden of debts.
OTH will use the proceeds of this transaction to reduce its debts and finance other current operations. This agreement illustrates another key milestone in the implementation of OTH’s plan to restructure its balance sheet.” Reported the Arab Advisors Group in a recently released publication
“The sale of Fastlink had another bright side to it for the regional operator, OTH. The share price of the operator increased immediately following the announcement of the sale which indicates the investors regaining their trust in OTH following its recent financial problems,” said the Group’s analyst, Hala Baqain.
A few days following the announcement of the acquisition, Fastlink revamped its postpaid offers. Fastlink’s famous “keep close” postpaid offers were changed. The major adjustment was the reduction on the connection fees for all the “keep close” postpaid offers from $ 21.3 to four dollars, presenting an 80 percent decrease. Postpaid monthly subscriptions were also reduced by 15 percent to 22 percent, with “keep close” 100 being offered at the same price of the previous “keep close” 50, which is no longer offered.
Unlike Egypt’s OTH, MTC is financially very comfortable. The Arab Advisors Group therefore believes that MTC will allow Fastlink to keep most of its profits and re-invest the profits in upgrading its network and enhancing its operations and market position.
MTC’s plans will probably revolve around preparing Fastlink to be Jordan’s second Integrated Communications Services Provider (ICP) in 2005 by seeking to launch its own international gateway and datacomm services focused on businesses. — (menareport.com)
© 2003 Mena Report (www.menareport.com)
