Telecom Egypt: We continue to follow the developments of the STC acquisition

1:36 PM

Thursday 13 August 2020

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I wrote – Shaima Hefzy:

Telecom Egypt said that it is continuing to follow the developments of the Saudi Telecom Group (STC) acquisition of 55% of the shares of Vodafone Egypt.

The company stated in a statement to the stock exchange today, Thursday, regarding the results of the first half of the year, that it is following the developments of the deal due to the importance of its investment in Vodafone Egypt.

Telecom Egypt said that it is working with its advisors to identify all available alternatives and evaluate them in light of their rights in the potential deal.

The company indicated that the available alternatives include:

– The right of pre-emption guaranteed to her in the shareholders’ agreement and the Articles of Association of Vodafone Egypt.

– The right to accept a compulsory purchase offer in accordance with the letter of the Financial Supervisory Authority, with the entry into force of Chapter Twelve of the Executive Regulations of the Capital Market Law No. 95 of 1992 relating to offers to buy with the intent to acquire.

– Any other rights guaranteed to it by the relevant Egyptian laws and by the shareholders’ agreement.

The Egyptian company said that it is fully convinced that the current shareholder agreement and the laws allow it to implement many strategic options, including maintaining its current share in Vodafone Egypt, selling it, or buying the remaining share of Vodafone International Group.

She added that it will work carefully to serve the interests of its shareholders while implementing the option that will maximize the return in the long term. Telecom Egypt will inform its shareholders as soon as it takes any decision.

Vodafone deal … a timeline

Last January 29: The Vodafone International Group and the Saudi Telecom Group STC signed a preliminary memorandum of understanding regarding a possible sale deal that provides for the latter’s acquisition of all 55% of Vodafone’s shares in Vodafone Egypt, at a value of $ 2.39 billion (8.97 billion Saudi riyals), equivalent to 38 billion fairy.

February 5: The Financial Supervisory Authority confirmed that the potential acquisition deal is subject to the provisions of Chapter Twelve of the Executive Regulations of the Capital Market Law No. 95 of 1992 regarding purchase offers with the intent to acquire.

February 13: Vodafone Egypt asked the Consumer Protection Agency to study the legal situation regarding Telecom Egypt’s use of the right of preemption set for it under the shareholders ’agreement to purchase Vodafone’s global share in Vodafone Egypt, and if this right is applied, will it be in line with the competition protection law.

February 19: Telecom Egypt’s Board of Directors approved the appointment of Hermes and Citi as a financial advisor and Tamimi & Company’s office as legal advisor to study options and investment opportunities available to Telecom Egypt to deal with its investments in Vodafone Egypt.

July 12: Vodafone International and STC agreed to extend the Memorandum of Understanding for a period of 60 days.

Upon completion of the deal, the two companies intend to enter into a long-term partnership agreement in the Egyptian market that includes many mutual benefits, the most important of which is the continuation of the use of the Vodafone brand, the distinct roaming agreements, and the benefit from the prices and central procurement agreements of Vodafone International and a group of other services. This agreement guarantees to Vodafone Egypt the continuation of Providing innovative technology products and solutions to its customers in the corporate and individual sectors

According to the Memorandum of Understanding signed by the two companies at the end of last January, final agreements were supposed to be concluded after completing the necessary procedures and approvals from the concerned authorities and completing the due diligence financial examination of Vodafone Egypt so that the sale process would be completed at the end of next June, however, the repercussions resulting from the preventive measures to confront the Corona crisis prevented that.

The memorandum of understanding between the two parties was extended twice, the first for a period of 3 months and the second for two months, as it is scheduled to expire in the middle of next month.

It is noteworthy that Telecom Egypt owns about 45% of Vodafone Egypt’s shares, while the British parent group owns the remaining 55%. The Egyptian government owns 80% of Telecom Egypt’s shares.

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