France Telecom-Orange JV to buy 44 per cent in Iraq's Korek Telecom

France Telecom-Orange along with Agility, a leading logistics company, will acquire a 44 per cent stake in Iraqi mobile phone operator Korek Telecom for around $300 million in cash, in addition to conversion of debt and loans.

For this, France Telecom-Orange and Agility will form a joint venture with stakes of 46 per cent and 54 per cent, respectively, which will provide Korek Telecom with fresh capital against 44 per cent of its equity.

Under the terms of the agreement between Agility and France Telecom-Orange, Agility will contribute its existing convertible debt and inject an additional payment of $50 million (36 million euros), in exchange for a 24 per cent indirect stake in Korek Telecom and a $100 million (72 million euros) 4-year shareholder loan to Korek Telecom.

France Telecom-Orange will pay $245 million (175 million euros) for a 20 per cent indirect stake in Korek Telecom, and will extend a $185 million (132 million euros) 4-year shareholder loan to Korek Telecom.

France Telecom-Orange estimates that the implied EV/EBITDA multiple attributable to Korek Telecom's Kurdistan operations is below 5 times.

France Telecom-Orange will contribute its marketing, commercial and technical expertise to reinforce Korek Telecom's leading position in the Kurdistan region of Iraq (with population of 5 million) and extend its operations to the whole of Iraq, which has a total population of 33 million.