France Telecom eyes Amena, raising concerns

19th July 2005, Comments 0 comments

PARIS, July 19 (AFP) - France Telecom said on Tuesday it was considering a bid for Spanish mobile operator Amena, but investors questioned such an acquisition that could cost the formerly heavily-indebted group up to EUR 9 billion.

PARIS, July 19 (AFP) - France Telecom said on Tuesday it was considering a bid for Spanish mobile operator Amena, but investors questioned such an acquisition that could cost the formerly heavily-indebted group up to EUR 9 billion.

A spokeswoman for the France Telecom said that the company was not taking part in an auction of the Spanish group, but that the file was under review.

"France Telecom is studying the Amena issue," she said.

Amena is the wireless division of Spanish telecommunications group Auna Operadores de Telecomunicaciones, which is being auctioned by Merrill Lynch.

Meanwhile, shares in France Telecom were down by 0.41 percent to 24.35 at mid-day. Analysts voiced concerns that the company, which carried debt of EUR 43.9 billion at the end of 2004, having come close to collapse after the Internet bubble, was back on the acquisition trail.

One trader, who declined to be named, said: "An acquisition could again raise debt owed by France Telecom, which seems not to have learnt the lessons of the past."

Others cast doubt on a move into the Spanish mobile market, which is dominated by the leading Spanish telecoms group Telefonica and by Vodafone of Britain.

"What is France Telecom doing getting caught up in this Spanish business?" analysts at Global Equities inquired, saying that the Spanish market was saturated by the two main players.

"Amena's best days in mobiles are behind it," they said.

Amena reported in April that it had a 22-percent market share in Spain,  behind Telefonica Moviles with 52 percent and Vodafone with 26 percent, after adding 312,000 clients in the first quarter.

Amena is 97.9-percent controlled by the telecom holding Auna. The core Spanish shareholders in Auna are bank Banco Santander Central Hispano and electricity firms Endesa and Union Fenosa.

Auna shareholders have signalled that they prefer to sell all of the holding's activities, which include a cable business. They were reported to have aimed initially to raise EUR 13 billion but were now looking for at least EUR 11.5 billion.

The France Telecom spokeswoman noted that the company "was not signed up in the formal sale process of Auna", explaining that it was not interested in all of Auna's businesses, other than its mobile telephone subsidiary Amena.

The sole bid for full acquisition has been made by the US investment fund Kohlberg Kravis Roberts, in alliance with BC Partners and Goldman Sachs.

An offer for the mobile operator Amena was placed by the funds Carlyle, Blackstone, Permira and Providence.

A third bid for Auna's cable division was offered by Spanish telecom Ono and its financial partners.

The spokeswoman for France Telecom explained that the possible bid for Amena was being assessed according to the impact on the group's operating performance and dividend policy.

To be acceptable to France Telecom management, the bid for Amena must not affect the ratio of the company's net debt to its earnings before interest, tax and depreciation (EBITDA).

France Telecom has set itself a target to reduce its debt to no more than twice EBITDA by 2008.

Likewise, the present management are committed to increasing the dividend to the average level for the sector.

France Telecom has reduced much of its debt pile built up during 1999 and 2002, partly through a EUR 15 billion rights issue.

In a speech on the company's strategy last month, new chief executive Didier Lombard said that the group would begin to look for possible acquisitions again, but would not make any "crazy takeovers".

He said: "We will not stop ourselves making a few external acquisitions on the condition that the choices are done according to our debt reduction and growth objectives."

Copyright AFP

Subject: French news

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