Morocco's Wana financial future is uncertain

Mergers, Acquisitions and Financial Results

Shares in Moroccan conglomerate ONA were suspended from trading in Casablanca on Monday after its board fired Chairman Saad Bendidi due to ballooning costs at start-up telecoms venture Wana.

Former civil servant Mouattasim Belghazi takes over from Bendidi at the top of the company, a flagship of Moroccan business that is controlled indirectly by the royal family and has interests in mining, banking, retail, insurance and food.

ONA cited serious management failings in its decision to fire Bendidi, who last month announced that Wana would beat a sales forecast for next year but would need additional investment as it rolls out third-generation mobile services.

"We knew they'd need extra money but not this much," said a senior analyst in Casablanca who asked not to be named. "If they don't do the additional investment in Wana, payback should still be next year. If they do, it could be as late as 2011."

Under Bendidi's tenure, ONA exited or took control of businesses in which it only had a minority interest. Last August he bought out Auchan from ONA's fast-growing supermarket venture after a management disagreement with the French company.

ONA stock has risen 19% this year as Bendidi confirmed a target laid out in 2007 for net profit to double to over 2 billion Moroccan dirhams ($275.5 million) by 2009. The shares closed at 1900 dirhams last Friday.

Earnings last year were boosted by the sale of a stake in an insurance venture with Axa and strong banking results. Profits have also been growing in retailing and at sugar refining subsidiary Cosumar.

Belghazi, who worked in various government departments and has a French economics doctorate, was previously head of ONA's affiliate Morocco-Emirates Development Company (Somed), which shares investments in Morocco with the Abu Dhabi Fund for Development.

ONA's board asked Belghazi to devise within three months a new business plan for Wana and a broader programme to overhaul the conglomerate.

ONA has poured money into Wana, which enters a highly competitive market domimated by incumbent Maroc Telecom controlled by France's Vivendi and Spanish-Portuguese owned operator Meditel.

"Right now is not the time to sell ONA shares," said the analyst. "This company is still looking good and its prospects are still the same. For now there is no big change in strategy."