Bharti Airtel could be one of the eight finalists in the race for a strategic 25% stake in the roughly $1-billion Omantel, Oman?s sole provider of fixed-line and Internet services, and a leader in that country?s mobile segment.
Though Omantel has not yet divulged the names of firms that have cleared the pre-qualification process, the Omani ministry of finance has confirmed that eight telecom operators have been selected to participate in the next phase of the sale process.
?The ministry, together with its advisors, is now in contact with the qualifying telecom operators that will be invited to submit first round technical and financial proposals for a 25% stake in Omantel. This includes prominent European, Asian and regional telecom operators,? the ministry stated.
When asked by FE whether the company is among the eight successful bidders, Manoj Kohli, CEO & joint managing director, Bharti Airtel, replied, ?I don?t know.?
Citigroup Global Markets Ltd and National Bank of Oman are advising the Omani ministry of finance on the divestment to a strategic investor. The Omani ministry holds 70% stake in Omantel. Invitations for expressions of interest were announced in February this year and the ministry plans to complete the sale by the end of 2008.
According to sources, a high-profile Omantel team, including representatives from the Omani finance ministry, visited New Delhi late last month for a series of meetings with Bharti officials. However, a Bharti spokesperson denied any such development. The sources said that if Bharti were successful in acquiring the 25% stake in Omantel, it would then jointly bid to become the third service provider in Iran.
Bharti Airtel, the country?s largest telecom operator with nearly 80 million subscribers, has been on the prowl for companies globally as a part of its ?targeting emerging markets? policy. In April, it was in talks with South Africa?s largest telecom operator, MTN, for which the company received a global funding commitment of up to $60 billion. However, the deal was called off as MTN asked Bharti to become its subsidiary.
Targeting emerging telecom markets has been part of Bharti?s policy to broaden its global footprint, and following the breakdown of the MTN talks, the company reportedly altered its M&A strategy to focus on smaller deals. Bharti is on a strong wicket, given the extremely low debt component in its balance sheet and has room to leverage further.
Moreover, given its sound standing, the company can easily raise funds even in these turbulent times.
Omantel underwent partial privatisation in 2005 when it was listed on the Muscat Securities Market. Apart from the Omani government?s 70% stake, 21% is held by private investors, and 9% by charitable organisations and Omani pension funds. The company?s market capitalisation was around $4.4 billion in the first week of July.
Omantel acquired 65% stake in Pakistan telecom company WorldCall Telecom Ltd in April for $200 million.
With 1.49 million subscribers, Omantel is the Gulf country?s largest mobile service provider with about 60% marketshare and is also its sole fixed-line service provider with around 2.5 lakh subscribers at the end of 2007.