Egyptian company Orascom Telecom Media and Technology (OTMT) is to take over the management of mobile operator Mobinil, pursuant to a 110 million Euro ($144 million) deal with France Telecom.
France Telecom (FT) negotiated with its Egyptian partner for the hand-over of the management contract of mobile unit Mobinil – one of Egypt’s two main mobile operators -, in which both partners hold a stake.
In return for taking on the supply of management services, FT will pay the sum of 110 million Euros ($144 million) to the Egyptian enterprise, in a sudden deal which was not widely anticipated.
FT has been expanding its stake in the Egyptian telecoms market, in a push to maximise on the growth potential of emerging markets in the Middle East and Africa. In this vein, only earlier this year FT bought most of OTMT’s shareholding in Mobinil in a deal worth 19 billion Egyptian Pounds ($3 billion)– taking FT’s majority ownership of the mobile venture to 94 percent. OTMT retains a 5 per cent stake in the operator.
In response to the announcement on Tuesday, share prices of OTMT saw a spike of 9.8 percent trading at 0.58 Egyptian Pounds ($ 0.09) by midday. OTMT was the most traded stock on the Egyptian Exchange following the revelation of the contract – 88.96 million Egyptian Pounds ($14 million) worth of shares exchanging hands over the day.
Mobinil prices also climbed 4.66 percent following the announcement of the management contract.
Investment Bank EFG Hermes revealed that the securing of the contract by OTMT had prompted the bank to revalue the Egyptian operator, lifting the valuation by 26 percent to 0.80 Egyptian Pounds ($0.13), reports Reuters.
It is expected that share prices in the Egyptian company may be set to rise further over the coming period, given that the company may be looking to declare a dividend on the back of the French payment. Conversely, the company may also choose to dispose of its remaining stake in Mobinil, and as such would record a cash inflow in the near future.