Telecom Egypt Retains Vodafone Egypt Stake, Citing Profit Potential

Telecom Egypt has reversed course on its plan to divest its 45% stake in Vodafone Egypt, opting to retain ownership due to projected significant returns. This decision comes after months of speculation surrounding the potential sale, with interested buyers reportedly including Qatar Investment Authority (QIA).

Telecom Egypt's about-face hinges on anticipated profits of up to EGP 3 billion (USD 157 million) from its Vodafone Egypt stake in 2024, according to sources familiar with the matter. These projected gains stem from a lucrative shareholder agreement, with the company having already received EGP 2. 1 billion (USD 110 million) in dividends during 2023.

Furthermore, the proposals received for the Vodafone Egypt stake fell short of Telecom Egypt's expectations. The company's current board of directors believes the existing partnership offers a better long-term value proposition compared to the offers on the table.

This decision to retain the stake marks a shift from previous stances. In 2023, discussions about a potential sale gained momentum, with reports suggesting QIA was eyeing a complete acquisition. However, a sticking point emerged regarding the size of the stake up for grabs, with the Egyptian government, Telecom Egypt's majority shareholder, reportedly hesitant to see more than 25% sold.

Telecom Egypt's initial openness to selling the stake stemmed from its desire to solidify its position within the mobile telecommunications market. The company, traditionally a fixed-line provider, entered the mobile market in 2017 with the launch of 4G services. Owning a significant share in Vodafone Egypt, a major mobile operator, presented a potential conflict of interest.

However, Telecom Egypt appears to have reassessed its strategy. The company may be confident in its ability to carve out a distinct space within the mobile market while still benefiting from its partnership with Vodafone Egypt. This dual approach could allow Telecom Egypt to leverage its fixed-line expertise while capitalizing on the growth potential of the mobile sector.

The decision to retain the stake is likely to have ramifications for Egypt's telecommunications landscape. With Telecom Egypt remaining a major player in Vodafone Egypt, the market may witness increased competition, potentially driving innovation and service quality for consumers.

Previous Article Next Article