Mumtalakat, the Bahrain government holding company, has started the sale of its stake in Bahrain Telecommunication Company [Batelco], Mumtalakat’s chief executive officer Talal al-Zain told mergermarket. “We have already invited a few companies to submit initial bids,” he said. Al-Zain declined to immediately comment any further on the transaction. The size of the stake on offer was not disclosed.
A source familiar with the process, however, said that at least a 37% stake was for sale and the second bidding round was currently underway, with price and social package the two main factors under consideration. The source pointed out bidder commitments to leaving the headquarters in Bahrain or guaranteeing Bahraini jobs could prove decisive.
Saudi Telecom and Etisalat appear to be strong contenders to go through to the next round, where only a handful of bidders will be left, the source added. Neither company could be reached immediately for comment.
Mumtalakat holds a direct stake in Batelco of 37% and a further 33% of Hawar Holding Company, which owns a 20% stake in the integrated telecommunications company.
The source said that the 37% stake was for sale but that it remained unclear whether the 20% stake indirectly held by Mumtalakat was also to be sold. The source added, however, that a controlling stake was likely to be sold eventually. The sale process could be completed within one or two months maximum, according to the source.
The Bahraini government’s total stake in the listed telco is 75%, with the remaining shares listed on the Bahrain Stock Exchange. In addition to Mumtalakat, the government’s stake is held through the Pension Fund Commission and General Organisation for Social Insurance, which, as the merged Social Insurance Organisation, own a direct stake of 18% and two-thirds of Hawar Holding.
Batelco was the first fixed line operator in the kingdom but now competes with 2Connect and Nuetel Communications for market share. It is one of two mobile operators in the kingdom and has 600,000 domestic mobile customers, according to its website. It has subsidiaries in Egypt, Jordan, Kuwait and Yemen and is launching mobile operations in Saudi Arabia.
A spokesperson for the Telecommunication Regulatory Authority [TRA] said that it has no knowledge of the sale. The TRA has yet to receive an application to amend Batelco’s licence in light of a change to its share ownership structure, as required under the terms of its licence, said the spokesperson. The application to change the licence is made during the sale process and is channeled through the Ministry of Commerce, the spokesperson said.
Mumtalakat is in the process of evaluating all of its investments to see what it wants to do with them, Al-Zain said. Among its diverse holdings, it owns 100% of Gulf Air, Bahrain Airport Company, Bahrain International Circuit and a 77% stake in Aluminium Bahrain, as well as stakes in National Bank of Bahrain and Gulf International Bank.
Batelco has a market capitalisation of USD 2.7bn.