Bahrain Telecommunications (Batelco) is eyeing a sale and lease back deal for its tower assets in Bahrain and Jordan, a banking source familiar with the matter said, in a move that would raise funds for potential acquisitions.
Batelco, which secured investment-grade ratings last month, has hired Citigroup to help with the sale process, the banking source said speaking on condition of anonymity. The deal may generate between $200m to $300m for the carrier, he added.
A formal bidding process is on and Batelco has received expressions of interest from a few bidders, the source said.
A Batelco executive said on Sunday the firm was looking at options to monetise the tower operations in the two countries.
"We are exploring all options to unlock value for our business and the towers is one of those options, but we have not made a decision on whether to lease them back or keep them - we are still going through the deliberations," said Peter Kaliaropoulos, Batelco chief executive of strategic assignments.
"We have no debt, so extra funds we derive -- should we proceed with monetising the towers -- will go towards future acquisitions because it reduces the cost of funding for us."
Batelco has been keen for acquisitions to shore up growth after losing its monopoly in the Gulf Arab island kingdom in 2003. Last year, it had a 37-percent share of Bahrain's mobile subscribers and fierce domestic competition from units of Kuwait's Zain and Saudi Telecom Co is pushing the operator to look abroad.
In September, a joint consortium led by Kingdom Holding and Batelco scrapped a $950m offer for a 25-percent stake in Zain Saudi.
Batelco also has interests in Egypt, Jordan, Kuwait, India, Yemen and Saudi Arabia, with these providing about a third of revenue in the first nine months of 2011.
Debt-free Batelco had a cash and bank balance of $230m as of Sept 30 and may issue bonds to raise financing for acquisitions after securing ratings from Fitch and Standard & Poor's, analysts say.
In a sale and lease back arrangement one party sells a property to a buyer who immediately leases the property back to the seller. This allows the original owner to make full use of the asset but have no capital tied up in the asset.
Saudi rivals Mobily and Saudi Telecom plan to close a tower-sharing deal by year-end to help the two carriers cut network maintenance costs in Saudi Arabia, in a first for the Gulf Arab region.