PARIS--Vivendi SA is in advanced talks to sell its controlling
stake in African phone operator Maroc Telecom (IAM.CL) to Abu
Dhabi-based Emirates Telecommunications Corp. (ETISALAT.AD), people
familiar with the matter said, after the only other rival bidder
dropped out of the running Friday.
Vivendi and Emirates Telecommunications, also known as Etisalat,
could enter exclusive negotiations over a sale of Vivendi's 53%
Maroc stake in coming days, one of those people added, though it is
still possible the deal could fall apart.
Selling Maroc Telecom is a lynchpin in Vivendi's broader effort
to get rid of its telecommunications assets and reshape itself as a
smaller business focused on a lineup of media companies.
In particular, the Maroc deal would set up the company's bigger
ambition to spin off French telecommunications operator SFR by
allowing the company to reduce debt, according to people familiar
with the matter.
On Friday, Qatar Telecom, the only other remaining rival in a
bidding process that has stretched months, said that it would yank
its competing bid.
"We just got frustrated," Jeremy Sell, chief strategy officer
for Qatar Telecom (QTEL.DO), also known as Ooredoo, said in a phone
interview. "Last week, they gave us very firm guidance on the price
and we said no way."
Ahmed Bin Ali, senior vice president corporate communications of
Etisalat Group, said late Friday: "Etisalat has taken note of
Ooredoo's announcement to withdraw its bid for Vivendi's 53% stake
in Maroc Telecom. We have no further comment at this stage."
People close to Ooredoo have been saying since mid May that
their frustration has been growing over a process that lacked
transparency, with Vivendi pushing for increased prices.
Both bidders--who submitted binding offers at the end of
April--have also had to win approval from Morocco's king, as the
state owns a 30% stake in the phone operator.
As for Etisalat, it remains unclear if there is a gap on price
between its bid and Vivendi's expectation, though one of the people
familiar with the matter said there were not many issues left that
could derail talks.
Vivendi executives and board members have studied a plan that
would split off French telecoms operator SFR from the company once
it has sold off a chunk like Maroc Telecom and used the proceeds to
pay down a significant amount of debt, according to people familiar
with the deliberations.
Vivendi had EUR13.4 billion in net debt as of Dec. 31. In one
structure under consideration, the company would actually spin out
the assets other than SFR, leaving the bulk of the company's
remaining corporate debt with the French phone operator, those
people said. But a decision has not yet been made, and any proceeds
from Maroc could take until fall to hit Vivendi's bank account,
likely pushing a spinoff until at least early next year, one of
those people added.
Vivendi has been has been looking to shed its telecommunications
assets last summer since a strategic showdown between Vivendi
Chairman Jean-Rene Fourtou and then-chief executive Jean-Bernard
Levy pushed the latter--who supported the telecom business--out of
the company.
The Maroc deal has taken on added importance as Vivendi has
failed to pull off other potential transactions it could have used
to pay down debt.
In March, its parallel effort to sell Brazilian
telecommunications operator GVT collapsed, after prospective
bidders like satellite-TV giant DirecTV walked away over price.
Write to Sam Schechner at Sam.Schechner@wsj.com
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