Saudi Telecom Must Offer to Buy Remaining 45% in Vodafone EgyptSource: www.export-egypt.com 2/6/2020, Location: Africa |
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Saudi Telecom Co (STC) must offer to buy the 45% of Vodafone Egypt owned by Telecom Egypt if it goes ahead with a $2.4 billion purchase of Vodafone Group’s stake in the company, Egypt’s financial regulator said.
STC struck a preliminary deal on Jan. 29 to buy Vodafone Group’s 55% stake in Vodafone Egypt. Another 45% is held by Telecom Egypt, itself owned 80% by the Egyptian government and 20% as free-floating shares on the stock exchange.
With 44 million subscribers and a 40% market share, Vodafone Egypt is the country’s biggest mobile operator. In a letter released on Wednesday by Telecom Egypt, Egypt’s Financial Regulatory Authority (FRA) confirmed the STC offer would be subject to a 1992 law requiring a mandatory tender for any outstanding shares. “Telecom Egypt is closely following the aforementioned potential transaction to consider all of its possible investment options and opportunities,” Telecom Egypt said in a stock exchange disclosure on Wednesday. Telecom Egypt may well be tempted to sell at least part of its stake, analysts said. Wael Ziada, a former telecoms analyst and now head of investment company Zilla Capital, said STC would have little problem absorbing the extra cost and that Telecom Egypt could use the extra funds after having launched its own mobile network in 2017 under the brand “We”. “Setting up a separate mobile network has been very expensive for Telecom Egypt and sent it from being a cash rich operator into one with debt of over 15 billion Egyptian pounds ($950 million),” Ziada said. “It may be tempted to have an injection of cash.” Allen Sandeep, head of research at Naeem Brokerage, suggested Telecom Egypt might opt to sell at least a portion of its stake. “Selling all of its stake could be a good move from a near-term perspective, retaining part of it might not be a bad move either,” he said. Vodafone Egypt is the most profitable telecom operator in the country.” |
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