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The Fastlink sale in Jordan: Good news for all?
The sale of 91.6% of Fastlink in Jordan, to MTC in Kuwait, values Fastlink at around US$ 462.8 millions. At a multiple of 1.61 estimated revenues of 2002 (7.82 profits of 2002), MTC seems to have gotten a very good deal. Orascom Telecoms dire need for cash to finance its new operations in Algeria and Tunisia was the biggest reason for the sale.
Orascom Telecom Holding S.A.E. (PRWEB) January 29, 2003 -based GSM
Telecommunications and Internet services operator in the Middle East, Africa and Pakistan, has recently sold its 91.6% equity stake in its Jordanian subsidiary, Jordan Mobile Telephone Services Company Ltd. (Fastlink) to Kuwaits Mobile Telecommunications Company.
A newly released report, Orascoms sale of Fastlink to MTC." was released to the Arab Advisors Groups (www.arabadvisors.com) Strategic Research Service subscribers on Jan 15, 2003. The Research Note analysis the transaction and its effect on Orascom Telecom and Fastlink.
Fastlink was Orascom Telecoms (OTH) crown jewel. It was amongst the highest revenue-generating subsidiary for OTH. However, the weary financial position of the operator has come to make the sale of Fastlink the most rational solution to ease its burden of debts. OTH will use the proceeds of this transaction to reduce its debts and finance other current operations. This agreement illustrates another key milestone in the implementation of OTHs plan to restructure its balance sheet." Arab Advisors Groups analyst, Hala Baqain wrote in the report.
The sale of Fastlink had another bright side to it for the regional operator, OTH. The share price of the operator increased immediately following the announcement of the sale which indicates the investors regaining their trust in OTH following its recent financial problems. " Ms. Baqain added.
A few days following the announcement of the acquisition, Fastlink revamped its postpaid offers. Fastlinks famous keep close" postpaid offers were changed. The major adjustment was the reduction on the connection fees for all the keep close" postpaid offers from US$ 21.3 to US$ 4, presenting an 80% decrease. Postpaid monthly subscriptions were also reduced by 15% to 22%, with keep close" 100 being offered at the same price of the previous keep close" 50, which is no longer offered.
Unlike Orascom Telecom, MTC is financially very comfortable. The Arab Advisors Group therefore believes that MTC will allow Fastlink to keep most of its profits and re-invest the profits in upgrading its network and enhancing its operations and market position. The MTCs plans will probably revolve around preparing Fastlink to be Jordans second Integrated Communications Services Provider (ICP) in 2005 by seeking to launch its own international gateway and datacomm services focused on businesses.
The Arab Advisors Groups team of analysts in the region has already produced more than 140 reports on the Arab Worlds communications markets. The reports can be purchased individually or received through an annual subscription to Arab Advisors Groups (www.arabadvisors.com) Strategic Research Service. To date, Arab Advisors Group has served more than 60 global and regional companies by providing reliable research analysis and forecasts of Arab communications markets to these clients. Some of our clients can be viewed on www.arabadvisors.com/flagship.htm
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Special note to the editors: Kindly use Arab Advisors (not AAG) when abbreviating Arab Advisors Group. AAG is not a suitable abbreviation since it conflicts with the name of another company not related at all to Arab Advisors Group.
Arab Advisors Groups Arabic name is مجموعة المرشدين العرب
Arab Advisors Group provides reliable research, analysis and forecasts of Arab communications, media and technology markets.
Arab Advisors Group Strategic Research Service is an annual subscription that has five forms of deliverables. The service covers fifteen countries in the Arab World: Lebanon, Syria, Jordan, Palestine, Egypt, Saudi Arabia, UAE, Kuwait, Qatar, Bahrain, Oman, Libya, Tunisia, Algeria and Morocco. Overall, the subscription involves receiving thirty country-specific reports, six industry trends reports, at least fifty two research notes per year in addition to fifteen hours of one-on-one interaction time with the analysts.
For more information, please contact the Arab Advisors Group offices. www.arabadvisors.com
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