Sources suggest that discussions are back on and that the Saudi Arabian operator is looking to raise over $1 billion secure the deal
Saudi Telecom (STC) has been in discussions over the purchase of Vodafone Egypt for almost two years now.
The saga began back in January 2020, when the two companies entered into a non-binding agreement that would see the Saudi operator purchase Vodafone’s 55% stake in Vodafone Egypt for $2.4 billion.
One month later, the situation was complicated by the Egyptian regulator, which highlighted a 1992 law that would require STC to offer to purchase the business in its entirety if it wanted to proceed. Analysts, however, suggested that this would not be a significant roadblock – STC had the financial power to make the deal in full if required and, besides, the holder of the remaining equity, Telecom Egypt, had said it had no intention of selling its stake.
But it was not regulatory issues that had the largest destabilising effect on the deal. As the months went on, the coronavirus pandemic began in earnest, causing STC to rethink its strategy. Having faced numerous delays in the acquisition, by September STC was reportedly seeking to reduce its initial bid.
Ultimately, in December 2020, discussions between Vodafone and STC were brought to a halt without having reached a final agreement.
Over the past year, however, rumours of further discussions have never been far away. Now, just a few days ago, CNBC Arabiya TV quoted anonymous banking sources that said STC is once again aiming to make the purchase, with the operator seeking to secure a soft loan of around $1.1 billion to finance the acquisition.
Following the report, Vodafone Egypt made a statement denying the existence of any acquisition talks, reiterating their commitment to the market. The company said it had invested around $760 million to develop infrastructure throughout the country over the past three years, as well as having spent nearly $400 million to acquire new spectrum.
Telecom Egypt, meanwhile, has also denied any knowledge of any ongoing discussions.
If STC does ultimately make the acquisition, it will be the operator’s first major acquisition beyond the Middle East, giving them a major foothold in Africa for the first time.