A new joint venture between France Telecom and Kuwaiti logistics firm Agility has been formed in order to purchase a 44% stake in the Iraqi operator Korek Telecom.
A 54% majority stake in the joint venture will be held by Agility, with France Telecom holding the remainder. Under the terms of the agreement, the French operator will acquire an indirect 20% stake in Korek for US$245 million, as well as granting the Iraqi firm a loan of US$185, repayable over four years.
The Kuwaiti firm will provide convertible debt and a further US$50 million to obtain an indirect stake of 24% in the Iraqi operator, which is number three in the Iraqi market in terms of subscriber numbers – however, it is still significantly behind the leading operators, Zain and Asiacell.
Korek is predominantly active in Iraq’s Kurdish region, and is now aiming to expand into the rest of the country – a move which will be facilitated by France Telecom’s “marketing, commercial and technical expertise.”
In three years’ time, France Telecom and Agility will be able to purchase a further 7% of Korek, which would give the joint venture a majority stake of 51%. The French operator could potentially also acquire a 53% stake in the holding company, meaning that its indirect stake in Korek would increase to 27%.
This would also give France Telecom indirect control over Korek, allowing it to integrate the Iraqi operator’s results into its accounts. It has been suspected for several months that the French operator would acquire a stake in Korek, which is owned by its founder, Sirwan Mustafa.