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Telecom Egypt acquires 23.5 percent of Vodafone Egypt - Daily News Egypt

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Telecom Egypt acquires 23.5 percent of Vodafone Egypt

TE share in VFE up to 49 percent; VFE welcomes acquisition CAIRO: Telecom Egypt (TE) officials said Sunday the company has succeeded in purchasing 56.3 million shares of Vodafone Egypt (VFE) for LE 5.5 billion. TE s acquisition has not yet been finalized as the company is still in the process of financing LE 4 …


TE share in VFE up to 49 percent; VFE welcomes acquisition

CAIRO: Telecom Egypt (TE) officials said Sunday the company has succeeded in purchasing 56.3 million shares of Vodafone Egypt (VFE) for LE 5.5 billion. TE s acquisition has not yet been finalized as the company is still in the process of financing LE 4 billion from a number of banks, according to Tarek Tantawy, TE investor relations and financial sector director.

Once concluded, TE s purchase will bring the company s share in VFE to 48.97 percent, up from 25.5 percent. Vodafone Group will maintain its 50.1 percent stake. Analysts expect VFE to be de-listed from the CASE 30 because less than 1 percent of its shares will remain floating.

VFE Corporate Affairs Director Omar El Sheikh says his company welcomes TE s acquisition. Vodafone Group had declined to sell any of its shares in VFE when the offer was made by TE two weeks ago. TE then ran a sizable media campaign announcing its willingness to buy up to 63 million shares, representing the 24.4 percent not owned by TE or Vodafone Group for LE 100 per share. VFE shares closed at LE 84 on Sept. 14, when TE s offer was made. At mid-day trading Monday, VFE was up to LE 95.73. TE shares traded at LE 15.86, up from LE 12.32 at market-close Sept. 14.

The key factor in what has happened yesterday is the decision of the minority share holders to sell their stock, says El Sheikh referring to Alkan Group, Banque du Caire and Egypt Post which owned just over 11 percent of VFE. As soon as the big players sold, the rest of the market followed.

According to TE officials, Alkan Group has agreed to sell its 5 percent stake in addition to its Chairman Mohamed Nossair s 1 percent share. The company says Banque du Caire and Egypt Post have agreed to sell their respective 3.4 percent and 1.8 percent shares at LE 100 per share.

Tantawi says TE is still looking to buy the remaining 0.9 percent of VFE shares still floating at LE 100 per share. In announcing its intention to strengthen its share in VFE, TE says the move was aimed at putting the company in a better position to compete in the increasingly developing Egyptian telecom market largely due to liberalization steps taken by the government. In 2007, the market will see the entrance of a third mobile operator, introduction of 3G technology, and two international calling operators’ licenses sold to the private sector.

VFE has already expressed strong interest in acquiring an international calling license. Having held a monopoly on international calls until Dec. 2005, TE collected LE 2.3 billion or 27 percent of total company revenues from international calling fees in 2005.

It is still unclear whether the National Telecommunication Regulatory Authority (NTRA) will allow VFE to bid for the international license.

We believe it s our right to bid for an International Gateway License, especially since the thid mobile operator will be given that privilege, says El Sheikh. An international license will help us expand and diversify our services in order to better meet the needs of our clients.

El Sheikh adds VFE welcomes TE s acquisition, but declined to comment on the possibility of delisting, saying it will be up to the newly-structured board of directors. Upon conclusion of the deal, TE will raise its board participation from three to six seats.

Internally nothing will change, says El Sheikh referring to company administration. Externally, we will benefit from the synergies of the two companies. Like our acquisition of Raya, this will help us provide more advanced services to our customers. TE has been our partner and this will insure that TE becomes a long term partner with Vodafone.

El Sheikh s comments came on signing day for VFE s acquisition of 51 percent of Raya Telecom for LE 104 million. Analysts expect the move will put VFE in better legal and technical positions to apply for an International Gateway License, due to be offered by NTRA by the end of the year.

Topics: FJP

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