Bloomberg News

France Telecom Agrees to Buy Most of Sawiris’s Mobinil Shares

February 13, 2012

Feb. 13 (Bloomberg) -- France Telecom SA said it reached a preliminary agreement to buy most of billionaire Naguib Sawiris’s stake in their Egyptian mobile-phone venture, increasing the French company’s control.

France Telecom will take over most of Sawiris’s stake in Egyptian Co. for Mobile Services, the operator known as Mobinil, at 202.5 Egyptian pounds ($33.54) a share, the Paris-based company said in a statement today. The price is 62 percent more than the stock’s Feb. 8 close. France Telecom will offer the same price for Mobinil shares traded on the Cairo exchange, while Sawiris will retain a 5 percent “economic interest.”

France’s largest telephone company is refocusing its business on fast-growing emerging markets as mobile revenue in Europe stalls. The Paris-based company has announced the sale of its units in Switzerland and Austria, and in the past two years struck deals to enter Morocco, Iraq and the Democratic Republic of Congo. Mobinil, the biggest phone company by revenue in Egypt, has a market value of about $2.3 billion and competes with Vodafone Group Plc’s local unit.

Sawiris’s Orascom Telecom Media & Technology Holding SAE holds a 20 percent stake in the Egyptian operator, while about 29 percent is traded on the Cairo stock exchange. The holding company controlled by France Telecom and Orascom owns the rest.

Holding Company

France Telecom owns about 71 percent of Mobinil Telecom Co., the holding company, while Orascom Telecom Media owns the remainder. Orascom Telecom Media confirmed the agreement in a separate statement today.

In 2010, France Telecom Chief Executive Officer Stephane Richard set a goal of doubling emerging market revenue by 2015, from about 3.3 billion euros ($4.4 billion) in 2009. Revenue in Egypt has suffered as the economy stalls following last year’s violent ouster of former president Hosni Mubarak and subsequent clashes between pro-democracy activists and the interim military government.

Still, the country -- the Arab world’s most populous, with more than 80 million inhabitants -- is among the largest developing economies in which France Telecom has a presence, and represents a key part of its Middle Eastern strategy, which includes operations in Jordan, Tunisia, and Bahrain.

As part of the April 2010 Mobinil settlement, Sawiris gained an option to sell his stake in the company to France Telecom during windows beginning in September 2012, at a price that would increase over time from 221.7 Egyptian pounds per share later this year to 248.5 pounds next year. The shares, which have been suspended from trading pending an announcement, have jumped about 76 percent in the past month.

For his part, Sawiris has become an important political figure in post-revolution Egypt, founding the pro-business Free Egyptians political party and criticizing Islamist influence in politics. He has recently pursued investments in Switzerland, where he bid for France Telecom’s local unit, and Austria, where he has teamed with investor Ronny Pecik to take a more than 20 percent stake in Telekom Austria AG.

--With assistance from Rudy Ruitenberg in Paris and Ahmed A. Namatalla in Cairo. Editors: Kenneth Wong, Simon Thiel

To contact the reporters on this story: Marie Mawad in Paris at mmawad1@bloomberg.net; Matthew Campbell in London at mcampbell39@bloomberg.net

To contact the editors responsible for this story: Jacqueline Simmons at jackiem@bloomberg.net; Kenneth Wong at kwong11@bloomberg.net


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