UK-listed Cable and Wireless Communications (CWC) and Portugal Telecom (PT) have agreed to sell their stakes in Macau operator CTM to Citic Telecom. The two transactions have a combined value of US$1.16bn.
CWC sold its 51% share in CTM, which it held…
UK-listed Cable and Wireless Communications (CWC) and Portugal Telecom (PT) have agreed to sell their stakes in Macau operator CTM to Citic Telecom. The two transactions have a combined value of US$1.16bn.
CWC sold its 51% share in CTM, which it held through Sable Holding Limited, for US$749.7m in cash. The UK-based telco said this equals an enterprise value of US$1.47bn and an EV/EBITDA multiple of 8.9 times. The disposal is part of CWC’s strategy to focus on Central America and the Caribbean. Recently CWC also agreed to sell its Monaco & Islands division to Batelco for up to US$1.025bn.
CWC’s sale is conditional upon PT completing the sale of its 28% holding, and vice-versa.
The Portuguese incumbent has agreed to offload its share in the Macanese operator for US$411.6m.
PT has also announced that it has entered into a three-year strategic alliance with Citic to exchange expertise and identify ICT investment opportunities.
The Portuguese operator was advised by law firm Garrigues, with PT’s internal corporate finance team handling the other aspects of the transaction.
Following the deals Citic, which previously had a 20% stake in CTM, will control 99% of the telco. A 1% stake will remain with Macau Post, which is owned by the Macanese government.
Citic considers bond issue
In a statement Citic said it would fund the purchases with cash and new bank loan facilities. The Chinese state-owned telco has obtained commitments on certain funds for short and long-term loan facilities from a syndicate of banks to cover all of its funding requirements for the acquisitions.
Citic said it may consider refinancing part or all of the facilities at a later date through a rights issue and/or a bond issuance.
Barclays is Citic’s lead financial adviser with Citic Securities Corporate Finance also providing advising on finance.
Last week it was reported that the banks providing a more than US$1bn syndicated loan to Citic were Australia and New Zealand Banking, Bank of Tokyo Mitsubishi UFJ, DBS, ING, Mizuho, Sumitomo Mitsui and Standard Chartered.
Citic said it plans to improve CTM’s performance by increasing investment in its infrastructure and integrate its operations into Citic’s to realise synergies and improve CTM’s international coverage. Citic plans to develop 4G in Macau and expand cloud computing in the administrative region.
“The group has been placing great emphasis on Macau as a strategic market,” said Xin Yue Jiang, Citic’s chairman.
“The increase in Citic Telecom’s stake in CTM facilitates our long term business expansion, generates solid synergies with our business integration and enables us to realise higher business growth.”
Citic’s acquisitions mark the end of a more than 30-year relationship with CWC and PT. The three companies established CTM in 1981 along with Macau Post.
CTM has a monopoly on fixed-line and broadband services in Macau and its enterprise unit serves the special administrative region’s many casinos.
Macau is China’s gambling Mecca and is the only place where gaming is legal in the country. It overtook Las Vegas in terms of revenues in 2007 and had 28 million visitors in 2011.
CTM had EBITDA of approximately US$163m for 2011.
CWC, which is being advised by JP Morgan on the disposal, said it expects the deal to complete in the next six to nine months.
In a statement CWC’s CEO Tony Rice said: “The disposal, when combined with our agreement to sell our Monaco & Islands business, is in line with the strategy we set out at our demerger in 2010.
“Following completion of these transactions, we will be a focused pan-America regional operator, with a strong balance sheet, and we intend to pursue new growth opportunities, both organic and inorganic, in this region.”
Batelco shareholders approve Monaco & Islands deal
Meanwhile Batelco has received shareholder approval for its up to US$1.025bn acquisition of CWC’s Monaco & Islands business.
CWC’s shareholders approved the deal last week.
The deal comprises CWC’s interests in the Maldives, the Channel Islands and Isle of Man, the Seychelles, South Atlantic and Diego Garcia, as well as a 25% shareholding in Compagnie Monagesque de Communications (CMC), which holds CWC’s 55% interest in Monaco Telecom. CWC expects this part of the deal, which has a value of US$680m, to close before 31 March.
Batelco and CWC have also entered into put and call arrangements in relation to CWC’s remaining 75% interest in CMC, allowing Batelco to acquire a controlling interest in Monaco Telecom for a further US$345m. The second part of the deal could complete in around a year’s time.
