Qatar Tel ups stake in Kuwait Wataniya in $1.8 billion deal

Sun Oct 7, 2012 5:15am EDT
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By Matt Smith and Dinesh Nair

DUBAI (Reuters) - Qatar Telecom QTEL.QA (Qtel) has nearly doubled its stake in Kuwait's No.2 operator Wataniya NMTC.KW to 92.1 percent, giving an instant boost to its bottom line and more control of subsidiaries in the high growth markets of Algeria and Tunisia.

Qtel, which operates in 16 countries across the Middle East, Africa and Asia, will pay 519.1 million Kuwaiti dinars ($1.8 billion) at 2.6 dinars per share to raise its stake in Wataniya from 52.5 percent, it said in a statement on Sunday.

"For the past couple of years the geopolitical situation in the Middle East has made it riskier to buy into new assets, so Qtel has prioritized raising its stakes in existing units where it knows the market and the other shareholders," said Marc Hammoud, Deutsche Bank telecoms analyst, in Dubai.

Qtel consolidates Wataniya's net profit on a pro rata basis. In 2011, the firm made a net profit of 362 million dinars from its operations in Kuwait, Algeria, Tunisia, the Maldives, Saudi Arabia and the Palestinian Territories.

Wataniya owns 71 percent of Algeria's Nedjma and 75 percent of Tunisia's Tunisiana, with this pair's revenue up 33 and 116 percent respectively last year, according to Qtel's results.

Yet Kuwait accounted for about 90 percent of Wataniya's net profit last year, with the country's average revenue per user (ARPU) among the highest in the Gulf.

"Tariffs aren't expected to decline substantially and this was an opportunity for Qtel to up its stake in a cash cow," said Abhinav Purohit, an analyst at IDC in Dubai.

Wataniya has an estimated 39 percent share of Kuwait's mobile subscribers, with Zain (ZAIN.KW: Quote) claiming 41 percent and Saudi Telecom Co's 7010.SE (STC) affiliate, Viva, 20 percent.   Continued...