France Telecom is poised to assume almost full control of its Egyptian mobile venture, Mobinil, having agreed to buy the majority of the shares owned by local tycoon, Naguib Sawiris.
The deal, which France Telecom has been struggling to close for several years, is seen as critical to the company's strategy of building a strong presence in its focus markets of Africa and the Middle East.
The acquisition of Mobinil, which is expected to gain the approval from the Egyptian telecoms regulator sometime this week, could be worth as much as €1.5 billion, according to the Financial Times.
If the deal is approved, France Telecom would raise its stake to 95 per cent of Mobinil, leaving 5 per cent in the hands of Sawiris. Of note, he will also retain a voting interest of 28.75 per cent that could ease Egyptian worries about national ownership. The CEO of France Telecom, Stéphane Richard, said he also intended about 15 per cent of Mobinil to be held by Egyptian investors if permitted by local conditions.
Amr Elalfy, director and co-head of research at Cairo-based investment bank CI Capital, told Bloomberg that he expected the deal would be given approval. He said France Telecom has three options to keep 15 per cent of the company in local ownership: "They can buy all the shares and sell them back at the market, which is unlikely because they can lose money, or raise capital without subscribing to it," he said. "The third option is to agree with an Egyptian partner to take this stake."
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