The Riyadh-based company would expand its regional influence with the proposed acquisition of Vodafone’s 55% stake
Vodafone CEO Nick Read met with Egyptian Prime Minister Mostafa Madbouli on Tuesday to officially announce to the government that Vodafone had entered a non-binding agreement with Saudi Telecom (STC) for the sale of their 55% stake in Vodafone Egypt.
The agreement values Vodafone Egypt at $4.4 billion, therefore pricing the acquisition at around $2.4 billion. The final price will be confirmed after due diligence and regulatory approval, with the final sale expected to close in June.
This news comes as part of a wider effort by Vodafone to streamline its business model and focus on Europe and sub-Saharan Africa.
“This transaction is consistent with our efforts to simplify the Group to two differentiated, scaled geographic regions – Europe and sub-Saharan Africa. It will reduce our net debt,” explained Read.
Indeed, Vodafone Group’s CEO for Africa, Middle East and Asia Pacific, Vivek Badrinath, earlier this week told reporters that the company had “keen interest
” in expanding to Ethiopia.
Saudi Telecom, on the other hand, is casting its net wider over the local region; the acquisition of a commanding share of Vodafone Egypt would mark their first expansion outside the Gulf.
“The potential acquisition of Vodafone Egypt is in line with our expansion strategy in the MENA region,” said Saudi Telecom CEO Nasser bin Sulaiman al Nasser (pictured).
Over six years ago, Saudi Telecom showed interest in bidding for the minority share of Vodafone Egypt, held by state-owned Telecom Egypt. At the time, Vodafone Group was also showing interest in buying out its junior partner, but neither deal was ultimately realised.
On Sunday, Telecom Egypt, once again reiterated that it was not looking to sell its 45% stake and had received no propositions. Upon being made aware of the potential STC–Vodafone deal, the company said it would watch proceedings closely “to study all available alternatives for it to handle its investments in Vodafone Egypt”.
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