Etisalat takes another major step towards bond issue

Etisalat is moving forward with investor meetings for what could become the telecom’s first public debt offering.

Etisalat on Tuesday notified the Abu Dhabi Securities Exchange that it had mandated banks to organise a series of fixed income investor meetings in the UAE, Asia and Europe, to start on June 1.

Four banks — Deutsche Bank, Goldman Sachs International, Royal Bank of Scotland and HSBC — are thought to be arranging the meetings.

Etisalat has been expected to issue bonds to fund part of its $5.85 billion acquisition of a 53 per cent stake in Maroc Telecom from Vivendi. — Reuters

Etisalat has been expected to issue bonds to fund part of its €4.2 billion ($5.85 billion) acquisition of a 53 per cent stake in Morocco’s Maroc Telecom from Vivendi, a sale that was completed this month.

The company has said that it raised €2.1 billion from 17 local and international banks as a one-year bridging loan for the purchase. This component is expected to be refinanced by the bond issue.

Meanwhile, etisalat may conclude a long-delayed deal to allow competition in UAE fixed-line telecommunications services by the end of 2014, according to a Reuters report, quoting a company document.

Etisalat and du have been unable to reach an agreement over so-called bitstream access, or network-sharing.

But now a company bond prospectus states that “etisalat anticipates that the bitstream access service will be launched by the end of 2014”.

Etisalat has blamed a recent drop in fixed-line average revenue on people opting to use Internet-based phone calls, or voice-over Internet protocol, or VoIP.

“Competition from du has been a less significant factor in the level of fixed-line Arpu [average revenue per user] as du only has fixed-line operations in a limited number of regions within the UAE,” it says in a bond prospectus.

Etisalat says it faces competition from illegal and unlicenced VoIP services accessible in the UAE permitting fixed-line and mobile phone calls at very low rates or without cost.

In May, du’s chief executive Osman Sultan said the lack of fixed-line competition was constricting earnings growth.

— haseeb@khaleejtimes.com