Cable & Wireless sells stake in Macau’s CTM

Cable & Wireless Communications Plc (CWC) says it will sell its 51% share of Companhia de Telecomunicações de Macau S.A.R.L. (CTM) to CITIC Telecom International Holdings for $749.7 million. CITIC Telecom, which already holds 20% of CTM, announced it will acquire the 28% of the Macau telecom provider Portugal Telecom owns, giving it 99% control of the company.

Cable & Wireless Communications Plc (CWC) says it will sell its 51% share of Companhia de Telecomunicações de Macau S.A.R.L. (CTM) to CITIC Telecom International Holdings for $749.7 million. CITIC Telecom, which already holds 20% of CTM, announced it will acquire the 28% of the Macau telecom provider Portugal Telecom owns, giving it 99% control of the company.

CWC says this sale is part of its strategy to focus on the Americas region. In addition to this transaction, the company is in the process of divesting its holdings in Monaco, the Channel Islands, the Isle of Man, the Maldives, and the Seychelles Islands.

The $749.7 million in cash CWC will receive for its Macau holdings represents an enterprise value of $1.47 billion for CTM and an enterprise value/EBITDA multiple of 8.9X based on results for the 12 months to March 31, 2012. CTM had a net cash balance of $70 million as of the end of 2012. CWC says it will use the money to reduce the company’s net borrowings, thus increasing its strategic and financial flexibility.

The deal is subject to regulatory approval and other conditions, including approval from CWC and CITIC Telecom shareholders, and the Governments of Macau and the People’s Republic of China, as well as CITIC Telecom’s deal with Portugal Telecom. This process is expected to take 6-9 months.

Commented Tony Rice, chief executive of CWC, “Cable & Wireless was a founding shareholder in CTM in 1981, and it has been one of the outstanding businesses within our group during this time. It has enjoyed strong growth, particularly in mobile and mobile data services, and the valuation we have agreed with CITIC Telecom reflects that. As an existing shareholder, CITIC Telecom knows CTM well and we’re confident it will continue to operate the business successfully. The disposal, when combined with our agreement to sell our Monaco & Islands business, is in line with the strategy we set out at our demerger in 2010. Following completion of these transactions, we will be a focused pan-America regional operator, with a strong balance sheet, and we intend to pursue new growth opportunities, both organic and inorganic, in this region.”

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