Leading telecoms giant, Vodafone Group has announced an agreed preliminary deal to sell its stake in its Egyptian unit to Saudi Telecoms (STC) for $2.4 billion, in a bid to streamline operations. The transaction, which will see the British network operator divest a 55 percent stake, is expected to close by June 2020.
Announced yesterday, 29th of January 2020, the deal is a non-binding agreement that values Vodafone Egypt at $4.4 billion. The two companies have agreed to long-term use of the Vodafone brand and other services in Egypt.
According to a statement by its Chief Executive Officer (CEO), Nick Read, trading the stake would be pursuing the company’s efforts to streamline its operations to focus on Europe and sub-Saharan Africa. In the words of the CEO, “it will reduce our net debt and unlock value for our shareholders.” The deal can be considered a well-calculated move as reports show that Vodafone Egypt had experienced a continued subscriber decline recently.
Commenting on the deal, Nasser al-Nasser, Chief Executive Officer of STC said, “Vodafone Egypt is the leading player in the Egyptian mobile market and we look forward to contributing further to its continuing success.”
The Arabian telecoms company further mentioned that the non-binding agreement was valid for 75 days from Wednesday and could be extended by mutual consent. It also said that no other parties were involved in the potential deal. Although, the agreement is subject to approvals by both parties and regulators.
Egypt has one of the largest mobile telecom markets in Africa, with effective competition and a penetration rate of about 94 percent. Invariably, STC, which has Saudi Arabia’s state fund, the Public Investment Fund (PIF), as its major shareholder, would be ushered into Egypt’s telecommunication arena as a key investor and an important player in the market through this deal.
But eyebrows are being raised over the implications of Saudi Arabia’s entry into Egypt’s telecoms space as past events show that both governments have been repressive and infringe on its citizens’ rights to speech. Through countless internet shutdowns and state policies, leaders of both Arab nations shut their people from speaking or sending information on happenings in the country out to the international community.
It is however not certain whether the final implementation of the deal and subsequently STC’s expansion into Egypt will affect the speech rights of the Egyptian populace. Telecom Egypt is the other shareholder in Vodafone Egypt.
