Batelco in $415m Jordan acquisition

Amman: Bahrain's Telecom (Batelco) has acquired a majority 96 per cent stake in Jordan's third mobile operator Umniah in a deal worth $415 million, company officials said yesterday.

Batelco's chairman Hassan Jumah signed the acquisition deal with Jordan's Umniah Mobile Communication (UMC) key shareholders in Amman on Saturday with the final completion of the deal set for June 28. Batelco is owned by Bahrain's government and 20 per cent by Cable and Wireless of Britain.

Batelco bought the shares of Umniah founder Michael Dagher, the managing partner, Kuwait's Fouad Al Ganim Partners and a 13 per cent share owned by Kuwait based Global Investment House and other investors.

Umniah, which began its mobile services last year, already has a 13 per cent market share in less than a year. It has 500,000 subscribers. Latest industry figures show over 3.5 million mobile subscribers in a country of over 5.6 million people with a 64 per cent penetration rate.

Batelco's acquisition will also help it to expand into the Jordanian market, where it acquired a fixed line licence in 2005 to compete with the sole provider and is also a leading data communications provider.

"The Umniah deal will help achieve tangible growth in profits for Batelco in the Jordanian market that is witnessing very fast growth," Jumah said.

"This is a sign of confidence in the investment climate in Jordan and in our ability to attract investors in the local telecom market," said Dagher.

Industry analysts said the deal reflects higher valuations for telecom assets in the Middle East on the back of high oil prices with more buyers than existing opportunities.

Batelco, the largest company by market capitalisation on the Bahrain Stock Exchange, said the purchase was a strategic move that was part of the firm's regional push.

"Batelco will continue its plans to expand its regional presence by targeted purchases of other operators," Jumah said. "We are looking at new markets in the Middle East and northern Africa," he added.

Analysts saw the acquisition as part of a push by Gulf operators to expand beyond their markets. "Batelco, like other operators in the Gulf, are expanding beyond their borders as their own domestic markets are close to saturation or already saturated," said Jawad Abbassi, general manager of Arab Advisors Group, a leading telecom consultancy.

Batelco's foothold in the Jordanian market would make it easier for the firm to widen its presence in fast growing Middle Eastern markets, Abbassi said.