Vodafone sells Egypt stake to South Africa affiliate ‘Vodacom’ for €2.72bn pending regulatory approval

Mohamed Alaa El-Din
4 Min Read

Vodafone Group has agreed to transfer its 55% stake in Vodafone Egypt to the former’s South African affiliate company, Vodacom. Telecom Egypt owns the remaining 45%.

It added in a press statement on Wednesday that the deal will bring clear benefits to the three companies, which are Vodafone Group, Vodafone Egypt, and Vodacom, expecting the deal to close before 31 March 2022.

Ayman Essam, head of the foreign and legal affairs at Vodafone Egypt, said that the sale is an internal process between the group companies, so Telecom Egypt is not entitled to submit a purchase offer under the pre-emption right.

He told Daily News Egypt that according to the amendment of the shareholders’ agreement between Telecom Egypt and Vodafone Group, the latter has the right to transfer its stake between the group’s companies, provided that Telecom Egypt is notified of all the details, which has already happened.

Essam confirmed that the Vodafone Egypt brand remains unchanged after the completion of the ownership transfer process.

Telecom Egypt had announced that Vodafone Egypt’s executive management had informed it that Vodafone Group had received an initial offer from its subsidiary Vodacom to transfer its stake in Vodafone Egypt to Vodacom.

Vodafone Group said in its statement that its stake in Vodafone Egypt is worth €2.722bn, free of debt, noting that based on its share in the company’s debts, the value of its equity amounts to €2.365bn.

It added that the transfer of ownership will be done through the settlement of about 80% of the purchase allowance of €1.892bn by issuing 242 million new ordinary shares of Vodacom in favor of Vodafone at an issue price of ZAR 135.75/share.

As a result of this settlement, Vodafone’s ownership in Vodacom will increase from 60.5% to 65.1%.

The company stated that the settlement of the remaining 20% ​​of the value of the transfer of shares would be settled in cash, amounting to €473m.

The company said that the completion of the transaction is subject to a number of additional conditions, including, for example, the approval of the Financial Supervision Department of the Reserve Bank of South Africa and the approval of the National Telecommunications Regulatory Authority in Egypt.

It explained that Vodacom has committed itself to Vodafone International that it will sign the deed of commitment to the shareholders’ agreement with Telecom Egypt.

Last June, Vodafone Group and Telecom Egypt signed the amended shareholder agreement of Vodafone Egypt.

The agreement granted many additional advantages and rights to Telecom Egypt in exchange for the Vodafone Group obtaining the right to transfer the ownership of its stake in Vodafone Egypt within the Vodafone Group companies, conditioned on the submission of the new shareholder – to whom the share was transferred – a deed of commitment to all the terms contained in the amended shareholder agreement.

The statement said that Vodafone Egypt’s management had reported that Vodacom had committed to submit the aforementioned instrument to Telecom Egypt.

Vodafone Group attempted previously to sell its stake in Vodafone Egypt and concluded a preliminary agreement with the Saudi Telecom Company (STC) for $2.4bn, but talks and negotiations stumbled more than once before stopping permanently in December 2020.

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