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Qtel to acquire remaining Wataniya stake for $2.2b

Qatar Telecom (Qtel) is offering $2.2 billion to buy the remaining 47.5 per cent stake it does not already own in Kuwaiti telecom company Wataniya.

The former state monopoly, which already owns 52.5 per cent of Wataniya, will pay 2.6 dinars per share, an 18 per cent premium to Wataniya’s last traded price, through a tender offer open to shareholders.

The company has received approval for the transaction from the Gulf state’s market regulator, Capital Markets Authority (CMA), it said in a statement on Thursday. Shares in Qtel rose 0.5 per cent at 0815GMT and are up 12 per cent year-to-date.

“Increased competition and pressures on the industry from new entrants as well as incumbents will most likely erode value over time and require increasingly dynamic responses,” Qtel chairman Shaikh Abdullah bin Mohammed bin Saud Al Thani said.

In June, Qtel agreed to double its stake in Iraq’s No.2 operator Asiacell to 60 per cent for $1.47 billion, seeking to exploit rising demand for broadband.

Qtel also owns a majority stake in Omani telecom operator Nawras. It bought its existing Wataniya stake in 2007 for about $3.7 billion.

Before they were halted when Qtel submitted its initial offer, Wataniya shares were trading at around 2008 levels, below some analysts’ targets, weighed by political turbulence that has dragged the Kuwait bourse to an eight-year low.

Investors were failing to take account of revenue growth prospects, high cash flow and low debt, analysts said, giving Qtel the chance to be the first full owner of a listed Gulf telecoms operator — possibly at a knockdown price.

The next major hurdle for Qtel is gaining the assent of Kuwait Investment Authority, the Gulf state’s sovereign wealth fund, which has a 23.5 per cent stake in Wataniya. The fund is yet to decide whether to tender its Wataniya stake to the offer, a source familiar with the matter said.