Vodafone will use proceeds from the deal to reduce debt/Bloombergby Kudakwashe Muzoriwa
Saudi Telecom Company (STC) has signed a preliminary deal with Vodafone Group to acquire the telecoms giant’s 55 per cent stake in Vodafone Egypt as the Kingdom telecommunications operator seeks to expand outside its home market.
In a bourse filing, STC stated that it has offered $2.39 billion cash for Vodafone’s 55 per cent stake in Vodafone Egypt, the country’s largest mobile operator and the non-binding MoU is valid for 75 days.
Additionally, the non-binding offer gives an enterprise value of $4.35 billion for the North African firm.
The deal gives STC access to a country of over 80 million people where Vodafone Egypt has a market share of about 44 per cent.
Nasser Sulaiman Al Nasser, the Chief Executive Officer of Saudi Telecom Company, said, “The potential acquisition of Vodafone Egypt is in line with our expansion strategy in the MENA region.”
Vodafone Egypt is the leading player in the Egyptian mobile market and we look forward to contributing further to its continuing success, said Al Nasser.
Bloomberg reported that more than six years ago, STC tried to acquire a 45 per cent stake in Vodafone Egypt held by state-run Telecom Egypt. Vodafone Group had also expressed interest in buying the Egyptian state-run telecommunication company’s holding in the unit. Neither deal was realised.
Telecom Egypt, which has a 45 per cent stake in Vodafone Egypt, said that it is considering all the possible ways it may deal with its investment.
Vodafone said it will use proceeds from the deal to reduce debt.
“The potential sale is also consistent with our efforts to simplify the group to two differentiated, scaled geographic regions - Europe and sub-Saharan Africa,” said Nick Read, Vodafone Group CEO.
Vodafone has been retrenching from markets outside Europe and Africa over the past decade, to raise cash to ease leverage concerns and build upscale in core markets such as Germany. Vodafone sold its New Zealand business last year, after offloading stakes in US carrier Verizon Communications in 2013, and Asian operators Softbank and China Mobile in 2010.
STC still derives the vast share of its revenue from Saudi Arabia, though it acquired stakes in telecom companies operating in Turkey, Indonesia as well as Bahrain, Kuwait and Malaysia over the past decade.