France Telecom and Swiss-headquartered logistics company Agility have agreed to buy a 44% stake in number three mobile operator Korek Telecom. With this new investment, the company will look to extend its reach from Kurdistan across the entirety of…
France Telecom and Swiss-headquartered logistics company Agility have agreed to buy a 44% stake in number three mobile operator Korek Telecom. With this new investment, the company will look to extend its reach from Kurdistan across the entirety of Iraq.
A joint venture held by Agility (54%) and France Telecom (46%) will own the 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 will pay US$245m for a 20% indirect stake in Korek Telecom and extend a US$185m fouryear shareholder loan to the mobile operator.
France Telecom 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, which would then see its stake rise up to 39% in 2014 and up to 51% from 2016.
Both buyers declined to name their advisers.
France Telecom says Korek Telecom will use the proceeds to pay licence fees and reduce debt, as well as improve and expand 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’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.” Agility chairman and MD Tarek Sultan and Korek chairman Sirwan Saber Mustafa joined Richard in highlighting Korek’s national expansion plans.
Korek is the country’s number three player behind Zain Iraq and QTel-owned AsiaCell, having paid US$1.25bn for a third national 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, which is based in Ebril in the northern Kurdish region of the country, says it has three million subscribers.
MTN had also been in the race but France Telecom was selected as preferred bidder in January.
The deal is pending the approval of the Communications and Media Communication, expected in the next few weeks.
