Telecom Egypt is in talks with three local and foreign companies for the potential sale and lease-back of a portion of its tower portfolio, with bids ranging from $150m to $250m. The deal involves approximately 2,500 of the company’s 2,800 towers.
Sources close to the negotiations, speaking on condition of anonymity, told Daily News Egypt that the three contenders: IHS Towers, Mobi Tower, and Helios Towers. All three are currently conducting due diligence. However, a source close to the company has suggested that Helios Towers is not involved in the sales process.
The final sale price will be determined based on the findings of this due diligence, and the entire transaction is expected to be finalised by the first quarter of 2024.
Telecom Egypt’s motivation for the sale stems from a desire to free up capital, particularly in light of the significant investments required in the telecommunications sector. Selling and leasing back towers has become a popular strategy for telecom companies worldwide, offering a cost-effective alternative to outright ownership.
The company is carefully evaluating the non-binding offers to ensure they align with its long-term strategy. These proposals will be presented to the board of directors at their December meeting, with the intention of sharing some details with shareholders.
Adding to the positive financial outlook for Telecom Egypt, Naeem Securities Research recently raised the company’s fair share value. This upward revision factored in the potential full divestment of the company’s 45% stake in Vodafone Egypt, estimated to fetch $1.1bn, alongside anticipated market developments in 2024.
Naeem’s analysis factored in a potential Egyptian pound devaluation, 10% growth in mobile and internet users, 18.3% annual revenue increase, and 19.5% annual growth in earnings per share.
Telecom Egypt’s financial performance remains strong, despite a 3.7-fold increase in financing costs during the first nine months of 2023. Improved operational performance and a 67% surge in investment revenues (to EGP 3.4bn) helped secure a net profit of EGP 9.1bn for the period.
Furthermore, the company achieved consolidated revenues of EGP 9.4bn in the first quarter of 2022, a 12% increase compared to the same period in 2021. This growth was driven primarily by a 22% rise in data services revenue, which now accounts for 74% of the company’s total revenue growth.
