Emaar in shock telecom move

Real estate giant Emaar Properties has surprised analysts by announcing it intends to extend beyond its core business and expand into the telecom-munications sector.

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By  David Robinson Published  October 9, 2005

The Dubai-based developer is among 15 companies known to have declared its interest in bidding for Telsim, Turkey’s second largest mobile phone operator with an estimated value of US$2.8 billion. The move would represent a significant break from Emaar’s standard line of business. However, it was unclear whether Emaar was looking at buying Telsim as an investment opportunity, or whether it might outsource operations to a partner. “I was quite surprised that they would be interested in Telsim,” said Mohsen Malaki, a telecommunications analyst at IDC. “I’ve heard that Emaar is interested in international expansion, but this is clearly outside their main area of expertise. “Telsim is already an established operator, it’s not like starting a business from scratch, which would be much more difficult for a company that doesn’t have much experience in the telco market,” he added. The developer has cash to spare after a rights issue in August increased its share capital to US$1.5 billion from US$774 million. Emaar chairman Mohammad Ali Alabbar said the increase in capital was intended to act as a “catalyst for Emaar to move to the next stage of its development as a truly global corporation”. A move into the telecommunications sector may signal the beginning of this next stage of development. The move would be Emaar’s first major foray in big-time telecom bidding, though the company had a small telecom set-up, Sahm Technologies, which it sold to Dubai Holding, the Dubai government’s investment arm, in June. “The argument is that they do have some experience in the sector,” said Justin Connor, an attorney with Al Tamimi law firm in Dubai. “Through Sahm Technologies they provided telecom to residential customers of Emaar.” Turkey, which began EU accession talks this week, has taken significant steps in recent years to open up its economy and encourage foreign investment. “Turkey is one of the markets that is definitely not as competitive as it could be and where there is a fair amount of pent up demand,” Connor said. An Emaar spokesperson was quoted as saying: “We can confirm that Emaar has submitted its interest in [the] prequalification stage for Telsim’s sell-off. We have not heard back from the authorities that we have been prequalified for the bids. The final bids will only be completed after due diligence and Emaar Board approval.” A number of high-profile telco companies are also bidding for the Turkish operator, such as UAE state-owned telecoms monopoly Etisalat and the UK’s Vodafone Group.

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