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ExxonMobil's swoop for ConocoPhillips' Clyden oil sands assets will provide upside risk to Canada's oil production outlook. As Conoco sheds its non-core assets, Exxon buys into a further project that will help it boost its oil output which has seen a decline over recent quarters. However, despite the positive outlook for production growth from oil sands, Canada will face particular difficulties in ensuring sufficient midstream capacity to export the heavier crude to market.
The Tunisian government has given Emirates International Telecommunications (EIT), part of Dubai Holdings, the permission to sell its 35% stake in incumbent operator Tunisie Telecom, according to a statement released by the Ministry of Information and Communication Technology (ICT) on June 20 2013. This development presents an opportunity for regional players looking to expand their footprint, although the pool of potential bidders could be thinned down by various limiting factors.
Ethiopia's telecommunications market will not be opened to competition in the foreseeable future, nor will state-owned incumbent Ethio Telecom be privatised, according to a statement made by the country's prime minister. While a change in government policy was in any case not anticipated, we continue to believe that the state continues to overlook the potential long-term benefits of liberalisation in favour of short-term goals and that it needs to shift to a pro-competition stance if it is to achieve ambitious broadband adoption goals.
India's Airtel is reportedly considering plans to hive off the tower assets of its African operations. This is in line with CFW's view of tower sharing in the region as operators move to put a lid on expenses. However, the move, which could see the spin-off of up to 18,000 telecoms towers in a deal valued at around US$2bn, could significantly change the market dynamics in the region's budding towers market.
On June 3 2013 Kuwait's Zain announced its plans to set up an Iraqi holding company, through which it will sell 25% of its Iraqi operations to the public. Listing a 25% share of Zain Iraq on the Iraq Stock Exchange (ISX) was part of Zain's US$1.25bn operating licence agreement. Although Iraq remains fraught with political tensions, CFW expects political instability is not serious enough to deter investors from the strong growth potential in Iraq's telecoms market.
On June 14 2013 Ooredoo announced it had withdrawn its bid for Vivendi's 53% stake in Maroc Telecom (MT), leaving the UAE's Etisalat as the sole bidder for the Moroccan operator. Although Ooredoo and Etisalat are both aggressively pursuing growth strategies, CFW believes that given its previous experience in Gabon, Benin and the Cote d'Ivoire, Etisalat is a slightly better fit for Maroc Telecom and its Sub-Saharan operations.
Sonaecom and the largest shareholder in pay-TV, operator Zon Multimedia, have proposed a merger of Zon with Sonaecom's mobile phone division Optimus. The merger would create the second largest telecoms operator in Portugal, with potential cost synergies estimated at EUR300-500mn. BMI believes the merger would strengthen Zon and create a stronger rival to incumbent Portugal Telecom.
Toyota's decision to set up a JV to produce hybrid batteries in China chimes with our view on the likely introduction of strong government incentives to promote the development of hybrid and fuel efficient engines, in light of the worsening air pollution in tier one cities. The easing of tensions from the Sino-Japanese dispute, which flared up in late 2012 will be another tailwind to hybrid car sales for Japanese automakers.
Hewlett-Packard is reportedly preparing to sell its 60.5% stake in its Indian IT services unit, MphasiS. Although BMI expects the sale will pique the interests of local IT companies seeking to augment their domestic footprints, those with their eyes on the growing international business process outsourcing (BPO) market will likely refrain from bidding. We therefore believe that private equity companies are the strongest contenders in a sale that could raise as much as US$700-800mn according to BMI estimates.
TAQA's acquisition of BP's assets will extend its position in offshore UK south into the Central North Sea. It also supports our view that despite the North Sea's maturity, its fields remain 'safe' assets to hold on to that can help support TAQA's bottom line as it moves into riskier oil plays. Although investments such as these into brownfield developments will only slow the rate of decline in the UK's upstream production at best, firms in possession of key assets in the North Sea can still expect to benefit from capital-rich players looking to buy into fields in this area given its strategic importance in global oil pricing.
Telecom Italia (TI)'s board has approved the proposal to spin off its fixed telecoms infrastructure assets into a separate company. The move aims to help the company pay down its EUR28.8bn debt with suggestions that TI's fixed assets could be worth up to EUR14bn, or five times EBITDA. TI would still hold a stake in the spun-off company, at least initially and the board has approved talks with state lender Cassa Depositi e Prestiti (CDP) to buy a stake in the proposed new company. CFW believes the deal has many benefits for TI as it looks to merge its mobile operations with H3G. However, we see hurdles ahead as regulations have yet to be pinned down.
The internationalisation of the Chinese currency continues to snowball. Beijing's 'yuan plan' to promote the renminbi as a bona fide reserve currency has seen it make reform after reform. And the offshore resort of Hong Kong has primarily been the arena for this strategy.
There is no denying it, US equity capital markets (ecm) are open for business. Indeed when the bulls start running, it is hard to stop them. This charge into the equities arena was perhaps best illustrated by the month of May, which recorded the highest level of ecm activity in the US since way back in March 2000.
With plenty of noisy neighbours, the Philippines is not normally the country you would think of when you think of equity capital market activity in Asia. This year, however, the Philippines has become a regional hotspot for equity market activity. Indeed according to data provider Dealogic, ecm activity in the Southeast Asian nation sits at a record high so far in 2013 in terms of both deal volume and deal value.