|Fastlink-Kuwaiti deal adds economic niche to mobile market
|The acquisition by the Kuwaiti Mobile Telecommunications Co. (MTC) of the Jordan Mobile...
The acquisition by the Kuwaiti Mobile Telecommunications Co. (MTC) of the Jordan Mobile Telephone Services (Fastlink) last December is considered as a landmark by an Arab company to invest in Jordan’s telecommunications sector.
The two companies announced last week the completion of the acquisition of 91.6 percent of Fastlink’s shares from the Egyptian Orascom, at $423.9 million.
The deal is the biggest of its kind in Jordan and the Middle East. Observers believe it is a substantial investment aimed at enhancing Jordan’s mobile phone environment, making it healthy for competition based on cost-efficient services. The transaction stimulated Arab and international investors in Jordan’s businesses, stressing their efficiency and competence.
“I believe the Kingdom has one of, if not the most, promising business environments in the world,” said Ibrahim Dabdoub, chief executive of the National Bank of Kuwait (NBK). “The deal between Fastlink and MTC shows Jordan’s opportunities for investments are growing steadily.”
Dabdoub’s remarks came following his supervision of the MTC-Fastlink agreement. The NBK acted as the sole financial advisor to MTC in the acquisition.
Dr Saad Al Barrak, MTC director-general, said the agreement with Fastlink stems from MTC’s strong confidence in the Jordanian business environment. He noted Fastlink’s solid market position and high-quality management team were also the driving force behind the deal.
“We were very impressed with Fastlink’s commercial and technical capabilities,” said Al Barrak in a press conference at the Four Seasons Amman Hotel last week. “We hope the acquisition will help us in extracting significant synergies in future.”
Before the deal, the Kuwaitis had only about five percent of Fastlink’s shares. Today, they are majority shareholders who can carry out key changes in the company’s policies and management. The Kuwaitis, however, indicated they are confident in Fastlink’s present management and their only focus is to enhance the company’s services and network.
“We are looking to take advantage of the latest in world’s GSM services and employ it for the better of Fastlink and its customers,” Al Barrak explained. “Increasing the company’s capacity, developing its services and improving its network are our priorities for the moment.”
The Jordan Telecommunications Regulatory Commission approved the acquisition three weeks ago. Commission sources indicated the deal is legal as long as “it serves the national telecommunications sector and provides better incentives for healthier competition among the concerned companies.”
Michael Dagher, Fastlink’s CEO, praised the agreement with MTC, saying it maintains Fastlink’s leadership in the Jordanian mobile market. With almost one million subscribers, Fastlink is Jordan’s first mobile-line provider set up 1995.
“The agreement with MTC enables us to spread the mobile services by providing new technologies and preparing ourselves for new telecom generations,” Dagher said. He added Fastlink is working on plans to adopt Kuwaiti expertise in mobile technologies to serve the company’s link services.
Kuwait’s MTC was established in 1983 with a capital of $82 million. Today, the company’s market capitalization is estimated at $3.2 billion.
Being the pioneer in mobile and paging services in the Gulf, MTC’s network today has more than 650,000 subscribers. The acquisition transforms the Kuwaiti company, making it one of the leading cellular players in the region with an installed base of about 1.5 million subscribers.
Al Barrak pointed that MTC always seeks to forge partnerships with key global companies to bring the best products and services in mobile and telecom networks to the Middle East. “We came to Jordan to stay and establish a basis for better development in cellular services for all Jordanians,” he said.
The Kuwaiti businessman indicated any future development in Fastlink’s projects and services will be positive on the social and economic development in the Kingdom. He noted the company has plans to turn into a shareholding firm to be listed later at the Amman Stock Market. “We aim to employ Jordanian human resources to develop their own country for the better. We also intend to provide our customers in Jordan with best quality services at minimum cost.”
Dabdoub, who is a well-known Arab economist, noted the MTC is Kuwait’s second largest shareholding company and is focusing on ways to expand its businesses throughout the region. He said the MTC’s presence in Jordan will pave the way for future Arab investments.”According to the IMF, Jordan and Tunisia are two of the countries where investments would be successful in the long run,” Dabdoub noted. “The events of 11 September 2001 forced Arab capitals and assets in the world to look for the developing markets. Jordan is an interesting one for these resources.”
Dabdoub announced the National Bank of Kuwait will open a new branch in Amman in the coming five months at JD 20 million. The move comes following the bank’s recent extensive study of the Jordanian economy.
“There is no emotions in business,” he stressed. “Capital always look for stable grounds. Despite the current political instability in the region, Jordan still has its stable foundation for future businesses.”