CAIRO: Mobinil’s purchase of LinkDotNet and Link Egypt grants the mobile operator a broad-reaching Internet Service Provider (ISP) that will allow it to compete on equal footing with competitors, analysts said.
On Saturday, Mobinil shareholders approved the purchase of both internet companies from major shareholder Orascom Telecom in a deal worth $130 million.
The purchase allows Mobinil to extend broadband and corporate communications services to its roughly 26 million customers — the mobile operator has the biggest number of subscribers — by providing fixed-line internet to its mobile data and voice offerings.
InTouch Communications, a wholly-owned subsidiary of Orascom Telecom Holding, inked the deal with Mobinil for the sale of Link, excluding “the non-ISP part of Link Egypt’s business and affects LinkDotNet’s Egyptian operations only.”
Meanwhile, Link Development, LinkOnLine, Connect Ads, Arab Finance Brokerage
Company and Arpu+ will remain owned by OTH.
The deal gives Mobinil full ownership of Orascom’s internet services arm LinkDotNet and Link Egypt, which represent 56 percent and 90 percent of OT’s revenue and EBITDA, respectively, according to an Orascom statement.
Through this acquisition, Mobinil and Link customers will benefit from an expansion of distribution channels as well as integrate solutions, such as single billing and single support for services, said Orascom.
Shareholders of Mobinil stock should profit from infrastructure and cost savings that will result from the synergy with LinkDotNet and Link.
Chief Executive Hassan Kabbani said the deal should boost Mobinil’s revenue, according to a Reuters report.
In addition to Mobinil looking to expand its services and step up its competitive edge, “the sale was also driven by Orascom’s need for cash, which it obtained through the selling off of a core asset,” explained Mohamed Hamdy, telecommunications analyst for Naeem Brokerage in Cairo.
He explained that the final outcome was better than Orascom had anticipated, in which France Telecom had offered the company only $70 million, which means $60 million less than what it obtained through the final agreement.
Hamdy said Orascom’s move was highly anticipated by his firm, as the company had been seeking for while ways to increase its cash flow.
As for Mobinil, he pointed out that this was a critical acquisition for the company, because it will now possess needed data revenue and subscribers, especially as the voice service sector is under a major competitive “squeeze” at the moment.
Although the acquisition has come a bit late for Mobinil, it is nevertheless a non-negligible move for the company, as LinkDotNet is number two in terms of market share, Hamdy noted.
Indeed, TE data, owned by Telecom Egypt, currently holds the top spot in the market with around a 61 percent share, while LinkDotNet around 30 percent.
Beltone Financial, a Cairo-based investment firm, agreed with Hamdy’s remarks, saying in a statement, “Such an acquisition should ultimately support the internet and data segment of Mobinil’s business in order to face competition from Etisalat Egypt (which acquired internet companies, Nile Online and EgyNet, in 2008) and Vodafone Egypt (which acquired internet company, Raya Telecom, in 2007).
The purchase finalizes a deal made possible by an ownership pact reached in April between Orascom and co-owner France Telecom.
Finalization of the deal was long overdue, as a disagreement between Orascom and France Telecom lasted over a year regarding the sale, as the former feared that it would leave the company closed off from its local market.
