Etisalat's Axiata sale nets $500m

Etisalat has raised Dh1.87 billion by selling shares in an Indonesian mobile operator and analysts expect it to make a complete withdrawal from that market by the end of this year.

Shares in the UAE's largest telecommunications group rose by more than 1 per cent after yesterday's confirmation it had sold 775 million shares in XL Axiata. Reuters

Etisalat has raised Dh1.87 billion (US$509.1 million) by selling shares in an Indonesian mobile operator and analysts expect it to make a complete withdrawal from that market by the end of this year.

Shares in the UAE's largest telecommunications group rose by more than 1 per cent after yesterday's confirmation it had sold 775 million shares in XL Axiata.

Etisalat bought a 13.29 per cent stake in XL Axisata in 2007 for $440m and will be left with a 4.2 per cent stake in the Indonesian mobile operator following the settlement of the deal, which is expected next week.

"The 775 million shares represent a total of 9.1 per cent of XL's issued share capital, representing a value of approximately Dh1.87bn before commission and expenses," Etisalat said.

Petr Molik, the head of the research division at Mena Corp, said it was likely Etisalat would sell the remainder of its shares in XL Axiata over the coming months. "They kept a token participation but I wouldn't be surprised if that was sold by the end of the year," he said.

Etisalat did not give details of who had acquired the shares. Mr Molik said a single buyer was unlikely, given Etisalat had retained some its holding in XL Axiata.

"If it was a single investor, it would be strange that they kept this 4.2 per cent," he said.

Shares in Etisalat, which are traded on the Abu Dhabi Securities Exchange, yesterday closed up 1.05 per cent to Dh9.66. Shares in XL Axiata, which trade in Indonesia, were up by 0.75 per cent to 6,750 Indonesian rupiah.Mr Molik said it was unlikely Etisalat would distribute the cash from the sale to shareholders.

"I think they will be sitting on the cash for a while," he said.

"There is very little chance of this being paid as a special dividend."

Etisalat, which is 60 per cent owned by the federal Government, operates in 16 countries across the Middle East, Africa and Asia.

Etisalat's foreign operations account for 28 per cent of its top line, according to the firm's second-quarter results. The company has embarked on an ambitious global expansion drive over recent years but many of its foreign ventures have been underwhelming.

Analysts say the company is likely to exit some of its non-core markets, such as Afghanistan and some of the African countries in which it operates.