What are the best scenarios for Telecom Egypt in the Vodafone Egypt deal?

Exclusive – Mubasher: After more than 7 months have passed, all scenarios are still available in the Vodafone Egypt deal after announcing the expiration of the term of the Memorandum of Understanding with Saudi Telecom without reaching an agreement.

Last Sunday, STC announced the latest developments regarding the Memorandum of Understanding with Vodafone. To acquire the group’s stake in Vodafone Egypt, which includes the end of the term of the memorandum of understanding without reaching an agreement to complete the deal.

STC noted that the termination of the deal came due to a lack of agreement with the concerned parties, indicating that an understanding was reached with Vodafone Group to keep the dialogue open..

In the same context, Amr Al-Alfi, head of research at Investment Bank Prime, confirmed to “Mubasher” that negotiations on the deal are still ongoing, stressing that the deal is good for all parties associated with it..

He continued: The deal allows Saudi Telecom to enter the promising Egyptian telecom market, and it also allows Vodafone to exit from investing in Egypt, according to its desire and priority order, and finally it allows Telecom Egypt the choice between buying and selling..

Telecom Egypt

Regarding the best scenario for Telecom Egypt, Al-Alfi pointed out that it has all the options, but the sale will be the most profitable for the company at the announced price, pointing out that the capabilities of Telecom Egypt at the present time allow it to buy, but it may lead to a decline in the value of the share due to the resort of Telecom Egypt in that case to debt.

For its part, Telecom Egypt confirmed that it had not received any offers from the two parties to the deal between the Vodafone Group and the Saudi Telecom Company, confirming that it was not informed of the details of the discussions and the terms of the negotiation between the two parties..

Telecom Egypt stated that it has thoroughly studied all options available to it and has also studied and analyzed its rights in accordance with the concluded agreements and applicable laws..

The Egyptian Telecom Company confirmed its ability to implement a number of strategic options while preserving the interests of the company and its shareholders, and these options include without limitation the following: Exercising the right of pre-emption guaranteed to it in accordance with the shareholders’ agreement concluded with Vodafone International Group and the Articles of Association of Vodafone Egypt, considering accepting any compulsory purchase offer In accordance with Chapter Twelve of the Executive Regulations of the Capital Market Law No. 95 of 1992 concerning offers to buy with intent to acquire and confirmed according to the letter of the Financial Supervisory Authority in this regard, in addition to any other rights available to Telecom Egypt in accordance with the relevant Egyptian laws and the shareholders’ agreement..

It is noteworthy that the company achieved profits amounting to 2.059 billion pounds during the first six months of 2020, compared to profits of 2.12 billion pounds in the comparative period of 2019..

The company’s revenues increased during the period by 18%, to 14.94 billion pounds, compared to revenues of 12.69 billion pounds in the comparative half of last year..

During the second quarter of 2020, the company’s profits reached 746 million pounds, compared to profits of512 Million pounds in the comparative quarter of 2019, up 46%.

Telecom sector in Egypt

On the expectations of the telecommunications sector in Egypt, the head of research indicated that the Egyptian market is promising and has gone through 3 main stages, namely subscriber growth rates. And then the increase in the revenues from voice calls and finally the data revenues which live in at the moment and still carry more momentum, especially with the proximity of the fifth generation application and the increase in reliance on applications via mobile phone.

By the end of last March, the total number of mobile phone subscribers increased to 96.43 million subscribers, compared to 93.43 million subscribers at the end of March 2019..

The total number of mobile internet users increased to 43.3 million users in January 2020, compared to 34.13 million users at the end of January. 2019, With a growth rate of 26.8 percent.

Hala Al-Saeed, Minister of Planning and Economic Development in Egypt, announced that the investments of the communications and information technology sector are estimated at 31.6 billion pounds in the 20/2021 plan, representing 4.3 percent of the plan’s total investments..

Al-Saeed indicated that the 20/2021 plan expects the sector’s production and output to increase by 26 percent (at current prices) and 16 percent (at constant prices), and that the sector’s contribution to growth will rise to 16.4 percent in 20/2021, and sector performance indicators are also expected to improve significantly. In the year of the plan, whether in the field of developing communication systems, deepening the local industry, or developing the sector’s exports.

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