France Telecom to acquire Amena for EUR 6.4bn

27th July 2005, Comments 0 comments

PARIS, July 27 (AFP) - France Telecom expanded its foothold in Spain Wednesday, saying it is to acquire 80 percent of mobile phone operator Amena for EUR 6.4 billion in cash.

PARIS, July 27 (AFP) - France Telecom expanded its foothold in Spain Wednesday, saying it is to acquire 80 percent of mobile phone operator Amena for EUR 6.4 billion in cash.

The move marks the first major acquisition for the French state-controlled operator since its debt crisis of 2002, and it said that even with the Amena purchase, it still aimed to reduce its debt by year-end and raise its dividends payout.

The deal to acquire Amena, the third-biggest Spanish mobile telephone operator with 9.7 million clients, values the company at EUR 10.6 billion when some EUR 1.7 billion of tax assets are included.

France Telecom said its mobile phone subsidiary Orange had signed an agreement to buy an 80 percent stake in Auna, the Spanish holding company that owns 97.9 percent of Amena, from its current Spanish owners: bank Banco Santander Central Hispano, electricity providers Endesa and Union Fenosa, and other minority shareholders, including several savings banks.

As part of the financing of the cash deal, France Telecom planned to launch a EUR 3 billion capital increase reserved for the current owners of Amena, who will hold approximately 20-25 percent of the merged Amena/France Telecom Espana entity.

These shareholders have agreed to keep their shares for at least three years, and France Telecom has first refusal rights should they wish to sell their holdings.

The deal would strengthen the French operator's position in Spain, the "fifth European market with an estimated growth potential between 2005 and 2008 of approximately six percent for mobile and more than 10 percent for data and Internet" services, it added.

Company chief executive Didier Lombard said: "The merger of France Telecom Espana and Amena confirms our strategy as an integrated European operator."

The acquisition would boost net earnings per share and free cash flow after one year, and should generate merger synergies of EUR 1.1 billion, France Telecom said.

France Telecom said the ratio of net debt to earnings before interest, tax, depreciation and amortisation (EBITDA) would be reduced to less than 2.5 percent by the end of this year, and maintained a steady increase in dividends from the EUR 1 per share it expected to pay on 2005 earnings.

From 2008, more than EUR 130 million in free cash flow would be generated from the acquisition, mainly from lower operating costs, but also from economies of scale for purchasing.

Amena held a 24 percent share of the Spanish mobile market as of June, and has average revenue per user above EUR 27, for a gross margin rate of more than 30 percent, France Telecom said.

Finalisation of the deal would occur only after the sale of Auna's cable operations, which do not interest France Telecom.

Auna Cable is to be sold for EUR 2.2 billion to another Spanish cable operator, Ono, according to the Alfredo Sanchez, general director of the Spanish bank SCH, one of Auna's principal shareholders.

With that deal done, France Telecom would then merge Auna, Amena and its Spanish subsidiary France Telecom Espana, which provides fixed-line and Internet services.

That transaction would leave France Telecom holding 75 to 80 percent of the new entity.

The price of shares in the French operator gained 1.93 percent at EUR 24.84, off earlier highs, in morning trade on the Paris stock exchange, while the CAC 40 index was 0.49 percent higher.

A broker explained that the EUR 3 billion capital increase of the widely anticipated deal was less than the estimations last week of up to EUR 5 billion.

"What's more, synergies should reach EUR 1.1 billion and in the end the deal will not cost the EUR 10.6 billion previously mooted," he said.

Copyright AFP

Subject: French news

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