CAIRO: While a court ruling Tuesday halted France Telecom’s tender offer for Mobinil, a company official said that a Feb. 13 meeting will decide the “merits of their offer.
France Telecom’s Vice President for Africa, Asia and the Middle East, Hesham Al-Alaily told Daily News Egypt, “Yesterday’s court injunction suspends our tender offer. There is an audience on Feb. 13 to decide the merits of our position – namely, that FT is justified in completing the tender offer of LE 245 per share in Mobinil.
Orascom Telecom claimed victory in the latest round of the ongoing dispute over ownership of Mobinil on Tuesday when it won the right to a court injunction delaying the expiration of the tender offer put forward by France Telecom (FT).
In a statement, OT said the court granted the company an injunction to stay the decision of the Egyptian Financial Supervisory Authority (EFSA) “to accept the publication of the mandatory purchase offer submitted by Orange Participation, an affiliate of France Telecom, for the acquisition of 100 percent of the shares of the Egyptian Company for Mobile Services (Mobinil) at a price of LE 245 LE per share.
Approved on Dec. 10 by the EFSA, the tender offer would have allowed FT to move forward in purchasing majority shares in Mobinil, as ruled by international arbitration in April. The purchase offer was planned to expire on Jan. 14, but was annulled by the court.
“A determination of the substantive issues will be made after a judicial committee has presented recommendations on the case to the court, which will examine such recommendations on Feb. 13, OT’s statement read.
Al-Alaily voiced his frustration at what he considers OT’s flouting of both international arbitration and accepted transaction practice. Explaining the road that has brought the two telecom giants to loggerheads, he gave a history of the dispute.
“In 2007, a minor budget dispute arose. Under our shareholder agreement, should we reach a deadlock, either FT or OT has the right to buy out the other company. OT offered to buy all of Mobinil at LE 190 per share. FT said no. the Egyptian market is important and we’ve put billions into investments; we want to defend ourselves. We made a counter offer, he began.
Bidding went on until OT decided to seek international arbitration in hopes that its first offer would be upheld. On March 10, 2009, arbitration ruled that FT’s latest offer, of LE 273 per share, was valid, not OT’s first offer.
Therefore, according to Egypt’s Capital Market Law, FT needed to purchase all shares in both Mobinil and ECMS for the equivalent of about $720 million.
Al-Alaily stressed that OT, essentially, started it. “OT initiated the bidding and then sought arbitration. FT is simply defending its rights.
“I want to clarify, he went on. “Since the creation of Mobinil we have been the major shareholder, with 71.25 percent. All major development of Mobinil have been conducted by FT.
“We didn’t have the intention to acquire ECMS, but the [Egyptian] regulation requires us to make mandatory tender offer. Then each shareholder has the freedom to sell or keep their shares, he added.
OT said in a statement that the court ruling confirms its position, “that there is no valid justification for a price differential between the price offered in the FT mandatory tender offer and the price of the sale stipulated in the arbitration award.
OT Executive Chairman Naguib Sawiris said Wednesday, “we are open to continue our amicable negotiations with France Telecom, with the aim to solve the ongoing dispute between the two companies and pursue our partnership with France Telecom in Mobinil as an operating company and continue to push Mobinil forward to maintain its leadership position in the Egyptian market.
Making the switch
Al-Alaily expressed surprise at the negative reaction from many Mobinil subscribers, some of whom have sworn to switch servers should OT lose its shares.
“FT is not a hostile company; we have been in Egypt since 1998. No one was even aware the FT owned most of Mobinil; it proves we have kept a low profile.
Other FT initiatives in Egypt include the Orange business service center and the telecom research and development lab in Smart Village.
“We believe the government encourages foreign investment; FDI is key for Egypt. And we know that the Egyptian state respects international laws and arbitrations. We entered [the market] and we are staying, he said.
Asked whether he believed the eruption of nationalistic antipathy to non-Egyptian ownership of Mobinil could dissuade other potential investors, he exclaimed, “I hope not! I’m Egyptian.
“We don’t understand the anti-FT campaign, he went on. “Two years ago when the submarine cables to Egypt were cut, it was FT who sent ships immediately to restore the cables, fixing them in record time. We were recognized by the telecom ministry.
Asked to explain the reaction among Mobinil subscribers, he answered, “The chairman of OT is a famous person, there is a lot of emotion behind this. But this is not a personal issue; it is pure business. You have rights that you need to preserve. you cannot accept that your partner is trying to expropriate you.
Al-Alaily clarified that meetings with OT have been professional and that FT has ensured that the dispute remained separate from management of the company and mobile services provided. He compared the dispute to a divorce, laughing that “you need to keep the kids away when parents are fighting.
Al-Alaily is determined that the discussion will follow legal procedure. “We are keen to preserve our right under the international award that gave us control of ECMS. We’ll look for all options either locally or internationally to get this right. And we are still open for all constructive discussion with our partner.
Asked why FT has remained relatively silent in the face of public opposition to its acquisition of Mobinil, he explained, “We didn’t communicate intentionally because we didn’t want to impact any discussion [by regulatory parties]. We are very objective and are trying to put emotions aside and to be factual. We give priority to the dialogue. Intervention by the media could be misinterpreted.
