MAROC TELECOM TAKES GABON TELECOM

UNCLAS LIBREVILLE 000081

SIPDIS

PARIS FOR AFRICA WATCHER

SIPDIS

E.O. 12958: N/A
TAGS: EINV EINT ECPS ECON EFIN GB
SUBJECT: MAROC TELECOM TAKES GABON TELECOM



1. Summary: On February 9, 2007, the Government of Gabon awarded
Maroc Telecom a 51 stake in Gabon Telecom for approximately USD 78
million. (The French company Vivendi owns 51 of Maroc Telecom.)
This concludes the privatization process of Gabon Telecom, which
originally began in 2003 and which was last re-initiated in January

2006. Privatization of Gabon Telecom was a benchmark set in the
GoG's last IMF program, and one which the IMF will look at as Gabon
negotiates a new three-year program. End Summary.

--------------
Gabon Telecom's Profile
--------------


2. Gabon Telecom was the state telecommunications company. With an
average of 2.5 main lines per 100 inhabitants, it operates
approximately 35,000 fixed lines. The company owns the connection
to the submarine fiber optic cable (South Atlantic
Telecommunications cable, SAT-3),which is currently underused. The
most lucrative part of the company is the cellular telephony
operator, Libertis, which is estimated to have 40 of the national
cellular market. This market is estimated at nearly 500,000 and is
expected to reach 700,000 by 2008. The company's net profit was $7
million in 2004. Gabon Telecom's payroll is inflated with
approximately 1,800 employees; it is estimated that only 300 are
needed.

--------------
The Deal and Potential
--------------


3. On February 9, Maroc Telecom was awarded 51% of Gabon Telecom for
approximately $78 million, with a pledge of an additional $100
million of investment over the next five years. This concludes a
privatization process which began in 2003 and was last re-initiated
in January 2006. Under the GoG's original call for proposals, the
transaction grants Maroc Telecom exclusivity in land lines for five
years. The pubic announcement of the transaction underlined the
importance of better utilizing the SAT-3 cable.


4. Despite Gabon's small market (population of approximately 1.4
million),Gabon Telecom has the potential to reach an 80 million
person market in the central African region through extension from
the SAT-3 cable. If Maroc Telecom is able to properly develop this
infrastructure, it could dramatically increase its profits.


5. Comment: The sale of 51% of Gabon Telecom has been long awaited
and expected. Maroc Telecom was known to be the favorite bidder,
and the collapse of Air Gabon International (and the Moroccans'
interest in the airline) may have tipped the scales in Morocco's
favor. Other factors that surely didn't hurt Maroc Telecom's
chances were that 51% of the company is owned by Vivendi, and that
high-level GoG officials are rumored to hold shares in the company.
Nevertheless, one of the key remaining state companies is now
privatized, which should benefit the state's finances and the
population. Privatization of Gabon Telecom was a benchmark set in
the GoG's last IMF program, and one which the IMF will look at as
Gabon negotiates a new three-year program.

WALKLEY