Qtel has increased its majority stake in Wataniya Telecom Kuwait at a price 15% lower than fair value, according to analysts.
The Qatar-headquartered telecoms giant increased its shareholding in Wataniya from 52.5% to 92.1% for KWD2.6 (US$9.25) per…
Qtel has increased its majority stake in Wataniya Telecom Kuwait at a price 15% lower than fair value, according to analysts.
The Qatar-headquartered telecoms giant increased its shareholding in Wataniya from 52.5% to 92.1% for KWD2.6 (US$9.25) per share, spending KWD519.1m (US$1.85bn) for 199,649,694 newly acquired shares.
“The shares were sold at 15% discount to our fair value of KWD3.07 (US$10.92)/share,” Nadine Ghobrial, telecoms analyst at EFG Hermes, told TelecomFinance. “Compared with the average multiples we have seen for other telecom deals in the region, this is considered a bit on the low side.”
Another analyst with close knowledge of the company affirmed the view that the shares were sold too cheaply. “Qtel got Wataniya at a good price,” said the analyst. “We believe the shares should have been sold for KWD3 (US$10.68) or KWD3.1 (US$11.03) per share, but luckily for Qtel, the Kuwait Investment Authority sold its stake at KWD 2.6.”
The analyst went on to say that he expected Wataniya to de-list from the Kuwait stock exchange as a result of the deal.
“So few shares are being traded now and it is a lot of work to maintain a listing, so I don’t see any rational reason for Wataniya to remain listed,” he said. “However there is no squeeze-out provision for minority shareholders and no minimum requirement to float in Kuwait. Due to these two factors, I expect the Capital Markets Authority will have to give permission for them to de-list.”
Qtel will be discussing the stake increase, as well as their financial results, on 22 October.
In 2011, Wataniya Telcom Kuwait posted revenue of US$ 2.62bn and net profit of US$ 1.30bn.
In a statement announcing the completion of the deal, Sheikh Abdullah Bin Mohammed Bin Saud Al-Thani, chairman of Qtel and the Qtel Group said: “We are delighted with the level of acceptances received from Wataniya Telecom Kuwait’s shareholders. We believe this is testament to the attractiveness of the offer which gave the opportunity for shareholders to capitalise on their investment in Wataniya Telecom Kuwait at a fair price and at an appropriate stage in the company’s investment cycle.
“We also respect the decision of those Wataniya Telecom shareholders who decided not to accept the offer and look forward to their continuing support as we enter into a new period of investment across all Wataniya Telecom Kuwait’s main markets,” he added.
Qtel was advised by Barclays Capital and the investment banking arm of National Bank of Kuwait on the deal. Consulting firm Protiviti advised Wataniya.
