Russia's largest mobile carrier Mobile TeleSystems OJSC (MTS) (RTS: MTSS; NYSE: MBT) has held initial talks with Orange franchisee Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR) to acquire the company from Ilan Ben Dov.
Chances of a deal are slim. Firstly, MTS conditions a deal on greatly reducing Partner's $300 million loan from its former controlling shareholder Hutchison Telecommunications International Ltd. (NYSE: HTX; HKSE: 2332), which lent Ben Dov the money as a seller's loan. Ben Dov is currently in Hong Kong to discuss changing the loan's terms, but Hutchison is unlikely to agree to large reduction.
Secondly, it is doubtful whether MTS or any other company would agree to enter Israel's mobile market at this time. Israeli telecommunications stocks have tumbled due to market reforms and the entry of new carriers, which have ignited a price war.
Private equity funds Apax Partners and TPG Capital, have also reportedly expressed an interest in Partner. Haim Saban has been offered the carrier. Partner has hired Deutsche Bank and Lazard to find potential buyers.
Market sources believe, however, that any potential buyers will wait for the market storm to pass and the carriers' share prices stabilize.
Partner's share price fell 3% in morning trading on the TASE today to NIS 17.40, after rising 2.9% on Nasdaq yesterday to $4.59, giving a market cap of $714 million.
Published by Globes [online], Israel business news - www.globes-online.com - on May 30, 2012
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