CAIRO: Telecom Egypt, Egypt’s fixed-line monopoly, said on Tuesday it would not increase its 45-percent stake in Vodafone’s Egypt unit following talks with the British firm, Reuters reported.
"The parties have agreed that it is in the best interest of VFE (Vodafone Egypt) that the current ownership structure should remain in place," Telecom Egypt said in a statement.
Telecom Egypt on May 21 said it was considering boosting its stake in Vodafone Egypt. Sources familiar with the matter said the firms had held informal talks about Telecom Egypt’s possible purchase of Vodafone’s 55-percent stake in the unit.
In an interview with Daily News Egypt last week, Vodafone CEO Hatem Dowidar stressed that ongoing talks with Telecom Egypt were primarily over the mobile operators’ ownership structure and not its administration.
Telecom Egypt had also said that it may “potentially to apply for the fourth mobile license if the Egyptian government were to make one available.”
Dowidar, however, warned that a fourth mobile operator may cause prices to fall too low and discourage investment in infrastructure and service quality. A new company coming in after 60 percent market penetration will always lead to competition mainly by lowering prices, he said.
Recent figure show that penetration is around 70 percent in Egypt, with the number of mobile phone subscribers rising by 1.2 million in March, bringing the total to 57.7 million out of a population of nearly 80 million.
Analysts told Reuters it was not clear that Vodafone was a motivated seller, and that the price it demanded might have been more than Telecom Egypt could have easily raised.
Orascom Telecom said last week it would also consider bidding for the Vodafone Egypt stake, but the Vodafone and Telecom Egypt statement that the current ownership structure should remain in place seemed to rule that out.
Telecom Egypt said Wednesday it has the right of first refusal to buy Vodafone’s stake in its Egyptian unit if the British mobile operator decided to sell, a newspaper reported on Wednesday.
"The two sides agreed on the right for Telecom Egypt to buy Vodafone’s 55 percent share in Vodafone Egypt according to what is termed the right of first refusal if Vodafone wanted to sell its share at any time," Telecom Egypt Chief Executive Tarek Tantawy was quoted by the daily Al-Mal as saying. –Additional reporting by Reuters.
