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Middle East telecom operators maintain appetite for international M&A

Middle East telecom operators will continue to lead international growth efforts via mergers and acquisitions, despite the increased cost of capital since the outbreak of political unrest in the region and North Africa, according to key regional players, investment bankers, and industry experts.

“M&A will be driven by new opportunities created by private equity exiting the industry, in-market consolidation and the emergence of new globalizing groups entering the emerging markets,” said Ghassan Hasbani, CEO, STC International.

Speaking in advance of the leading industry event, TMT Finance Middle East 2011 Conference & Awards Ceremony, taking place in Dubai at the Ritz Carlton Dubai International Financial Centre on May 9-10, Mr Hasbani outlined how financing challenges would be met.

“Financing is now available with attractive terms to operators, however, creative vendor financing may take a higher importance over the next few years, provided it is in a form that helps operators improve their debt profile,” said Hasbani, who will speak on the Global Telecom Strategy Round Table, the opening session of the conference, which features leaders from regional operators including Batelco, Etisalat, STC and Qtel.

The annual regional telecoms event, which uniquely gathers telecom leaders, investment bankers, investors and advisers, will feature 10 key panels sessions and over 50 executive speakers debating the latest strategies for investment, financing and M&A across the sector.

Global strategies for mergers and acquisitions will be a key theme for the conference with an M&A Advisers Panel assessing how consolidation will shape international markets. There will also be the presentation of the annual awards for Telecom Deal of the Year, M&A Adviser of the Year, Debt Bank and Emerging Market Growth Story of the Year at the TMT Finance Middle East Awards Dinner on May 9.

“There is a great deal of positive momentum among key Middle East telecom operators who are pressing on with expansive strategies, as shown by STC and Qtel submitting bids for the third Syrian mobile licence auction last week,” said Dominic Lowndes, Managing Director of BroadGroup TMT Ventures, the organisers of the conference, and Editor of TMT Finance News Alert. “Although there is a short term requirement to manage risk, the region does not need lots of external capital to grow, so we expect a strong continued flow of activity.”

Investment bankers predict that medium term, the focus will be on in-market mid-cap consolidation, with a propensity for share for share transactions driving synergies. “Infrastructure sales will also drive deals, especially across African telecom portfolios” added Lowndes. “The pressure to pursue deals in emerging markets is also being maintained by the major European operators such as France Telecom, which is actively pursuing acquisitions in the Middle East and Africa; Vodafone, which has a strong presence in Africa and Asia; and Telefonica.”

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