France Telecom-Orange and Swiss logistics company Agility have agreed to buy a 44% stake in Iraqi mobile operator Korek Telecom.
A joint venture will be set up where Agility will hold a 54% stake and France Telecom-Orange a 46% stake. Under the…
France Telecom-Orange and Swiss logistics company Agility have agreed to buy a 44% stake in Iraqi mobile operator Korek Telecom.
A joint venture will be set up where Agility will hold a 54% stake and France Telecom-Orange a 46% stake. Under the agreement, Agility will contribute its existing convertible debt and invest an additional US$50m in exchange for a 24% indirect stake in Korek Telecom and provide a US$100m four-year shareholder loan to the mobile operator. For its part, France Telecom-Orange will pay US$245m for a 20% indirect stake in Korek Telecom and extend a US$185m four-year shareholder loan to the mobile operator.
France Telecom-Orange has also acquired an option to increase its indirect stake to 27%, which would give it indirect control of the company enabling it to consolidate Korek Telecom in its accounts. If the option is exercised Korek will be able to sell a portion of its stake to France Telecom-Orange, which will then see its stake rise up to 39% in 2014 and up to 51% from 2016.
France Telecom-Orange says Korek Telecom will use the proceeds to pay licence fees, reduce debt as well as improving and expanding network and services.
The French company also said it sought to reinforce Korek Telecom’s position in the Kurdistan region of Iraq, which has a population of five million, and extend its operations in the rest of the country, which has a total population of 33 million.
Stephane Richard, France Telecom-Orange’s chairman and CEO, said: “The acquisition of this stake in Korek Telecom is a new step in our policy of expansion outside Europe, and contributes to our stated aim of doubling our revenues in Africa and the Middle East by 2015. I am delighted to contribute to this strategic partnership, especially at a time when Korek Telecom is expanding its operations across the entire country, thereby offering the latest services and technologies to the whole Iraqi population.”
Korek is the country’s number three player behind Zain Iraq and QTel-owned AsiaCell, having paid US$1.25bn for a third licence in 2008. Iraq’s mobile penetration stands at an estimated 75%.
Agility agreed a US$250m option to buy a stake in Korek in September 2007.
Korek is a private company that is based in Ebril in the northern Kurdish region of the country.
MTN was also in the race but France Telecom-Orange was selected as preferred bidder last January.
