Vodafone International Group and Saudi Communications Company (STC) have announced signing a memorandum of understanding (MoU) to sell the group’s 55% stake in Vodafone Egypt to the Saudi company, according to a statement by Vodafone on Wednesday.
Vodafone International Group’s share in Vodafone Egypt is valued at about
$2.392bn.
According to the statement, the two companies are to conclude agreements once completing the necessary procedures and receiving the final approvals from concerned parties. The companies will also need to complete the financial due diligence examination of Vodafone Egypt before it switches hands.
The selling is expected to be completed by the end of June 2020.
A legal source in the communications sector said that Vodafone International is able to sell its shares in Vodafone Egypt without providing an offer to Telecom Egypt (TE) under preemption unless it is clearly stated in the shareholders’ agreement or the company’s statute.
He explained that the two parties may receive the Financial Regulatory Authority’s (FRA) approval to exempt the deal from preemption if present in the shareholders’ agreement.
For his part, Ayman Essam, director of legal and foreign affairs in Vodafone Egypt, said the preemption item is present in the shareholders’ agreement between TE and Vodafone International. This means that once the final price of the deal is determined, it will be presented to TE.
He added that TE has the right to present a parallel offer, provided that it would be identical to the first offer presented by STC, in which case it would be entitled to acquire Vodafone Egypt entirely.
TE previously said in a statement that it closely follows the measures of selling Vodafone’s share in Vodafone Egypt.
The company added that it has been studying all available alternatives for dealing with its investments in Vodafone Egypt, which is within the company’s rights in accordance with the shareholders’ agreement and the final draft of the acquisition.
On the other hand, a source in the communications sector ruled out that TE would make an offer similar to STC’s to acquire the rest of Vodafone Egypt’s shares. This is due to the rise in the financial offer’s value, which does not match TE’s financial situation at the moment.
The source said that TE has made many investments in its infrastructure in the last two years, in addition to paying more than EGP 5bn for purchasing 4G licences. It has also made investments as a mobile operator in ‘’WE’’ network, which reduces its chances in making a financial offer similar to STC’s.
