UAE telecoms firm Emirates Telecommunications Corp (Etisalat) could invest at least $500 million if it wins a tender for a telecom licence in Libya as it looks to boost its customer base into North Africa, a top executive said on Tuesday.
Libya is very strategic, Jamal al-Jarwan, chief executive of Etisalat's international unit, told Reuters by telephone.
We would need a new network and it will not be less than $500 million, he said. That's the minimum to get started, Jarwan said, declining to say how much it had bid for the licence.
Etisalat, the Gulf Arab region's second-largest telecommunication's firm by market value, said in a regulatory filing it submitted a bid to the Libyan General Telecommunications Authority on July 15.
The UAE firm will compete against Turkey's biggest mobile operator, Turkcell, which said on July 13 that it would also bid for the Libyan license, citing high growth potential.
Etisalat has been expanding overseas, especially in Africa, as it faces stiffer competition in its home market of the United Arab Emirates, where some analysts have predicted that job cuts could reduce population, weighing on profits of Etisalat and rival du.
OPEC member Libya is the latest North African state to allow private investors into the lucrative telecoms sector, after government officials repeatedly said the country did not need foreign private-sector involvement.
Libya has two state mobile phone operators, Libyana and Madar, to service a market of 5 million.
We're hopeful we can add value, although the size is small, users are holding good at $15 revenue per user (ARPU), Jarwan said, adding that it would bring its experience in applications such as 3G to the table.
Etisalat's shares closed 0.96 percent up in Abu Dhabi after Jarwan told Reuters the firm was also interested in buying a 51 percent stake in Kuwaiti mobile operator Zain.
Etisalat has the advantage of applying their experience in Egypt to other markets in Africa, Khaled Akl, head of research at Abu Dhabi Commercial Bank. The entry price ticket of these markets is cheap and there is a potential for growth in subscribers despite the lower levels of ARPU.
STILL NO MOVE IN MOROCCO
The firm's chief financial officer, Salem Ali al-Sharhan, told Reuters by telephone from Switzerland on Tuesday that Etisalat had yet to make a bid for a stake in Meditel, Morocco's second-largest telecoms firm.
Portugal Telecom has appointed Morgan Stanley to sell its 32 percent stake in Meditel, people familiar with the matter said in May.
In the same month Etisalat's chairman told Reuters it would bid for the Meditel stake as it seeks acquisitions in the Middle East and Africa after asset prices declined.
We are still looking at Morocco, but will it materialise? It's not clear, Sharhan said.
Etisalat made a second-quarter net profit of 2.41 billion dirhams ($656.1 million), down 19 percent from a year earlier but beating forecasts.
The company said on Friday that growth in revenues would help the firm expand and develop national and international business units.
Etisalat believes Africa is a growth market due to lower market penetration levels in comparison to developed markets, said Akl. Egypt has been a successful story for Etisalat as mobile penetration level for the country has increased from 39.82 percent in December 2007 to approximately 60 percent as of June 2009.
Etisalat has more than 85 million subscribers and expects subscriber numbers to reach 100 million in 2010.
(Reporting by John Irish; Editing by John Stonestreet and Rupert Winchester)