Cable & Wireless Communications (CWC) is to sell most of its Monaco & Islands division businesses to Bahrain’s Batelco for the cash fee of $680 million as it looks to reduce debt and focus on operations in Central America and the Caribbean.
The UK-headquartered operator will sell all its shareholdings in the Maldives, Channel Islands and Isle of Man, the Seychelles, South Atlantic and Diego Garcia, as well as a 25% stake in Compagnie Monegasque de Communication (CMC), which owns 55% of Monaco Telecom.
The fee works out at about 6.3 times earnings before interest, tax, depreciation and amortisation (EBITDA) for the businesses being sold and will allow CWC (London, UK) to reduce net debt from $1.59 billion to $937 million.
That equates to about 1.8 times total EBITDA, which compares relatively favourably with ratios reported by other global telecoms operators.
CWC also has a put-and-call option allowing it to sell the remaining 75% of CMC to Batelco (Manama, Bahrain) within the next 12 months for an additional fee of $345 million.
If that is not exercised, another option allows Batelco to return the 25% stake in CMC to CWC for a consideration of $100 million.
“The disposal of the Monaco & Islands portfolio is consistent with our objective of building a growth-driven pan-America-focused business,” said Tony Rice, the chief executive of CWC, in a statement. “We will continue to operate the Monaco Telecom business, with the option to crystallise the second stage of the transaction if necessary consents are obtained.”
Operating conditions in a number of CWC’s Central American and Caribbean markets remain tough, but the operator sees greater opportunities for expansion in this region than elsewhere.
In October, it was reported to be in talks with Citic Telecom International (Hong Kong), a Chinese conglomerate, over the sale of its controlling stake in Macau’s largest telecoms operator.
Cash-rich Batelco views the acquisition of the Monaco & Islands division as a chance to grow its presence outside the Middle East region.
“Batelco Group will have the opportunity to operate, in collaboration with its new business partners, communications businesses across 17 markets,” said Sheikh Mohammed bin Isa Al Khalifa, Batelco’s chief executive. “This acquisition supports our strategy by adding new cash-generative business clusters to our existing operations across the Middle Eastern region.”
For the six months ending in September, revenues from the Monaco & Islands division were 7% lower than in the corresponding period of 2011, at $280 million, while EBITDA fell 3%, to $94 million.
CWC blamed the decline mainly on currency weaknesses compared with the year before.