Oger eyes South Africa's Telkom

Dubai-based telco to use proceeds of sale of stake to Saudi Telecom to fund purchase, CEO says

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By  Ercan Ersoy Published  January 23, 2008

Oger Telecom plans to buy into South African fixed-line operator Telkom, Oger chief executive Paul Doany told reporters without giving more details.

Dubai-based Oger will use some of the $2.6 billion cash from the sale of a stake to Saudi Telecom, the largest Arab telecom firm by market value, which said on Sunday it bought 35% of Oger for $2.6 billion.

Oger already has a majority stake in unlisted Cell C, South Africa's third-biggest mobile operator.

"As to Telkom South Africa, Oger Telecom submitted an offer which we believe to be in the interest of both Telkom and our Cell C. We hope to see progress with this soon," said Doany, also chairman of fixed-line company Turk Telekom, an Oger unit.

Doany, speaking at a meeting with reporters late on Monday, did not specify the size of the offer but he said about $830 million will be paid to shareholders as a dividend and "some part" of the proceeds would go to the South Africa investment.

"The structure in South Africa will be similar to what we have here with fixed-line operator Turk Telekom and [Turkish] mobile operator Avea," he said.

Oger bought a 55% stake in Turk Telekom for $6.55 billion in 2005 in a partial privatisation. The state holds the remaining 45%. Turk Telekom has a controlling stake in Avea, Turkey's third mobile operator.

Oger Telecom, controlled by the family of late Lebanese prime minister Rafik Al-Hariri, also operates in Saudi Arabia, Lebanon and Jordan, providing fixed-line, mobile and internet services.

Saudi Oger has been looking to sell shares in its telecom business for more than a year. Oger Telecom announced a $1.25 billion initial public offering (IPO) in 2006 but cancelled it on concerns about tumbling Gulf Arab markets.

"The sale to Saudi Telecom will also open business opportunities for Oger, Turk Telekom and its companies to have access to Malaysian, Indonesian and Indian markets through Saudi Telecom's investments there," Doany said.

He said that either as Oger Telecom or Turk Telekom, the companies were interested in telecom sales in Azerbaijan, Kazakhstan, Kyrgyzstan and Ukraine.

Doany said TT.net, an internet provider fully owned by Turk Telekom, aimed to reach 5.4 million subscribers by end-2008 from 4.33 million a year earlier. TT.net's 2007 revenues were seen at $1 billion.

He said the company was rapidly preparing for an IPO planned for Turk Telekom this year, which he said would be one of the largest in the region in 2008.

Turkey's Privatisation Administration said earlier this month eight bids were submitted in a tender to pick a financial advisor to float about 15% of the company.

Turk Telekom's final 2007 results will be out in mid-February but its voice revenues, which are almost 85% of total revenues, are estimated to be 5.33-5.35 billion lira ($4.33 to $4.35 billion), almost unchanged from 5.3 billion lira in 2006, Doany said.

He added that Turk Telekom plans $3.4 billion investments from 2007 to 2010. (Reuters)

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