UK-listed operator Cable & Wireless Communications (CWC) is struggling to transfer its stake in Monaco Telecom to Middle Eastern buyer Batelco due to outstanding regulatory approvals.
Last December CWC came to an agreement with the Bahraini incumbent to…
UK-listed operator Cable & Wireless Communications (CWC) is struggling to transfer its stake in Monaco Telecom to Middle Eastern buyer Batelco due to outstanding regulatory approvals.
Last December CWC came to an agreement with the Bahraini incumbent to sell its Monaco & Islands division for an enterprise value of US$680m.
The deal included the sale of a 25% shareholding in Compagnie Monagesque de Communications (CMC), which holds a 55% interest in Monaco Telecom. The remaining 75% of CMC could be transferred to Batelco for a further US$345m at a later stage. If this option is not or cannot be exercised, the 25% shareholding in CMC will be sold back to CWC for US$100m. The 45% of Monaco Telecom not held by CWC is owned by a company controlled by the principality.
“We have had interaction with the Principality of Monaco on the required transfer consents for the remaining 75% of CMC to Batelco and the feedback has not been as positive as we expected,” CWC said in its annual results statement.
It is not clear why Monaco does not want to consent to the deal. CWC did not disclose a reason. One report claimed the principality is cautious about working with an unfamiliar partner.
In a presentation today CWC’s CFO Tim Pennington said: “Monaco was always going to be more difficult, hence the option structure that we put in place there.”
“At this point we’d like to be sitting here telling you we made a lot of progress and we were close to getting to the conclusion of that transaction – unfortunately we can’t say that hence we’ve made the comment that its proved more difficult for us than perhaps anticipated at the time.”
If the disposal does not go ahead the size of the overall deal package would shrink from US$680m to US$580m, and the second US$345m stage would not go ahead.
The companies have until April 2014 to obtain consent from the Monagasque authorities, according to the CMC put and call arrangement between Batelco and CWC.
With its strategy to become a regional player in Central America and the Caribbean CWC, which plans to move its operational HQ to south Florida, would have to find another buyer if Batelco cannot acquire the unit.
“If CWC is forced to look for other bidders, we believe Monaco would stimulate decent interest, insulated as it is from EU macro pressures,” Jefferies analysts said.
CWC, which is also in the process of disposing its Macau business, posted annual revenues of US$2.88bn and US$905m EBITDA for the last financial year.
