Vodafone Group announced the signing of a memorandum of understanding (MoU) with Saudi Telecom Co (STC), the kingdom’s biggest telecom operator, to sell a 55% stake in Vodafone Egypt. With 44 million subscribers and a 40% market share, Vodafone Egypt is the country’s biggest mobile operator.
Saudi Telecom Company boasts and extensive global presence, expanded abroad by acquiring 25 percent of the Axis Group in Malaysia, which operates in the telecommunications field with a value of $ 3.04 billion, which in turn operates a number of mobile phone networks in Malaysia, Indonesia and India. Moreover, It also obtained 26 percent of the third mobile phone license in Kuwait, with a value of $ 924.6 million. STC acquired 35% of the shareholders ’shares in UAE-based Oger Telecom, in the beginning of 2008, in a deal valued at $ 2.85 billion. STC also acquired various proportions in a number of local and regional institutions and companies, including Arabsat Corporation for Satellite Communications and working in the field of satellite broadcasting, the Arab Sea Cable Company linking the two banks of the Red Sea (Saudi Arabia – Sudan). The company acquired 100 percent of the provider AllNet internet services, in addition to the Saudi commercial company. STC held an 8.8 percent direct stake in Careem but it sold it with the acquisition by Uber of Karim Company for approximately $ 3.1 billion, so that the share of Saudi Telecom Company from this acquisition reached $ 274 million.
In May 2019, Saudi Telecom launched the first live sites for the fifth generation network after completing its experiments, for the first time in the Middle East and North Africa.
The capital of Saudi Telecom Company STC is estimated at SAR 20 billion, and its market value is about SAR 186.4 billion. During 2019, STC achieved revenues of SAR 54.4 billion, marking a growth rate of 4.64 percent. Its net profit reached SAR 10.755 billion.
At the time of the MoU signing, Vodafone Egypt was valued at around $4.4 billion and both companies have agreed to a long-term partnership agreement, which includes use of the Vodafone brand, preferential roaming arrangements, and giving access to Vodafone’s central procurement function.
Chief Executive of Vodafone Egypt Mr. Alexander Froman stated that the company had already planned to hire more than 1, 000 employees above the already 7,800 employees working between Cairo and Alexandria.
Telecom Egypt shares rose by 10% in early trading last Thursday, rising for a third consecutive day following the bid announcement and Egypt’s Minister of Telecommunication and Information Technology Amr Talaat stated that the proposed deal underscored the attractiveness of the telecommunications industry in the country.
Vodafone Egypt shares fell 0.8% in Riyadh, and London-based Vodafone Group dropped 0.2%.
Vodafone CEO Nick Read stated that Vodafone will use proceeds from the deal to reduce debt and that the potential sale is “consistent with our efforts to simplify the group to two differentiated, scaled geographic regions — Europe and sub-Saharan Africa,”
According to Bloomberg, despite these and other moves, including a cut in the dividend and a plan to monetize its tower assets, S&P Global Ratings lowered the company’s credit rating one level to BBB in August, citing concerns about its debt.