CAIRO: Following Orascom Telecom’s (OT) failed appeal to the Egyptian Financial Services Authority (EFSA) in favor of France Telecom’s (FT) offer to purchase 100 percent of Mobinil’s shares at LE 245 per share, OT intends to “file a case before the Administrative Court (Investment Division) to challenge [the decision by EFSA].
On Dec. 10, 2009, the EFSA had finally approved FT’s tender offer for purchasing OT’s shares in Mobinil after three previous rejections of prices offered. OT appealed the ruling on the grounds that there were “no valid reasons justifying the approval of FT’s latest offer, according to a statement.
Orascom Telecom maintains that the legal price per share should be LE 273, as per an arbitration ruling in April 2009.
On Sunday, the independent grievances committee evaluating OT’s appeal rejected it, implicitly giving its approval for the legal proceedings that have resulted in FT’s latest share price.
OT has filed for an annulment and injunctive relief to the EFSA’s ruling “prior to the expiry of the purchase offer period on Jan. 14, in order for the Administrative Court (Investment Division) to have sufficient time to consider the legality of the share price currently on the table.
Orascom Telecom’s Director of Public Relations, Manal Abdel-Hamid, clarified OT’s position. “We are pursuing amicable negotiations with France Telecom. At the same time we are appealing the decision of the EFSA [to approve the price of LE 245 per Mobinil share], she told Daily News Egypt.
“We seek to adjourn the court, that is, to stay the decision until the court has sufficient time to consider, she continued.
“We are challenging the decision and asking for its annulment and are also seeking to stay the sale prior to the expiry of the purchase offer period. it doesn’t make sense to question the price after it has been implemented. We ask to stay the sale until the court rules about the price.
“According to Egypt’s Capital Market Law . LE 245 per share should not be accepted as the price for an obligatory tender offer for the minority shareholders. The legal price should be LE 273 per share.
“We do not see that there are any valid reasons justifying a price differential [as approved by the EFSA] and in our appeal we have presented proof that the justifications presented by France Telecom for the price differential are incorrect and illogical.
The dispute between the telecom giants for Egypt’s largest mobile service provider has dragged on since FT’s victory last year in an arbitration ruling that required Orascom to sell its stake in Mobinil for the equivalent of LE 273 per share.
Chairman of the Egyptian Financial Supervisory Authority (EFSA) Ziad Bahaa El-Din told reporters, “At the end, we are trying to implement what will achieve the public interest, what will achieve the reputation and stability of the market.
What now appears as an increasingly petty quarrel over a difference of LE 28 recently came under the spotlight when OT founder Naguib Sawiris phoned in on the popular television show “Al-Qahira Al-Youm on Dec. 15 and stated that he would not give up Mobinil “without a fight.
His comments prompted a wave of text messages among Mobinil users, urging them to switch to a different service provider should FT succeed in purchasing Mobinil from Orascom.
The messages appealed to Mobinil subscribers to “take action by defending a fellow Egyptian apparently bullied by a large multinational company and protesting the loss of Egyptian ownership of the country’s largest mobile provider.
The fact that FT has possessed the legal right to purchase OT’s shares in Mobinil for the past year, and that the dispute at this point amounts to price haggling, was not made clear to those Mobinil users who rushed to show support for Sawiris as a compatriot in need.
Despite its attempts to push the share price back to the originally agreed sum, OT appears to be running out of legal options. Should the Jan. 14 deadline pass without a stay of the court’s decision, the EFSA’s approval of the share price at LE 245 per share would stand.
Given OT’s current tax dispute with Algeria and its ambitions to further expand beyond the seven countries in the Middle East and Asia where it currently operates, Sawiris himself had previously acknowledged that selling Mobinil to FT would greatly benefit the company.
Although his tone has changed since his impassioned speech before Egyptian viewers, following the arbitration ruling in April, the Associated Press quoted him as saying, “It means a check for $1.7 billion and we are out of ECMS [Egyptian Company for Mobile Service, operator of Mobinil].
He also called the sale, “an emotional loss and a financial gain, adding, “I’m sure that when we see the $1.7 billion check, I will forget my grief.
He pointed out that the deal with FT would make OT “one of the cash richest telecoms in the region on the balance sheet, and (it) will have very strong new firepower to conduct major acquisitions.
FT’s interest indicates its confidence in Mobinil’s potential. It is expected that once FT inevitably acquires Mobinil, it may lower fees and offer additional services, especially if it must lure subscribers who may have made good on their threat to switch mobile providers.
