Saudi Telecom to pay $2.4bn for Vodafone Egypt stake
February 3, 2020
Prospective deal comes as Riyadh-listed STC seeks to expand regionally. Saudi Telecom Company has signed an initial agreement to acquire Vodafone’s 55 per cent stake in Vodafone Egypt for $2.4bn in the latest step to unravel the British group’s global empire.
Vodafone has in recent years sold out of or merged with rivals in a number of countries, including India and New Zealand, to focus on expanding its European footprint.
The sale of the Vodafone Egypt stake, which follows the disposal of its Qatari business in 2018, means Vodafone will be split between its European operations and its sub-Saharan African arm under the Vodacom banner.
The prospective deal, which values Vodafone Egypt at $4.4bn, comes as Riyadh-listed STC seeks to expand regionally.
“The transaction, which is still subject to detailed due diligence, confirms STC’s eagerness to maintain a leadership position not only in the KSA [Kingdom of Saudi Arabia], but also in the wider region,” said Nasser al-Nasser, chief executive of STC.
The state-controlled telecoms group, which is 70 per cent owned by the government’s Public Investment Fund and is listed on Riyadh’s Tadawul exchange, has previously said it could play a key role in reducing the kingdom’s dependence on oil by driving digital revenue growth.
The PIF, Crown Prince Mohammed bin Salman’s main investment vehicle, is expected to become more active in local and global deals as it receives almost $30bn from last month’s initial public offering of oil group Saudi Aramco.
STC also operates in Kuwait, Bahrain and Malaysia.
Gulf states, especially Saudi Arabia and the United Arab Emirates, have been seeking to boost investment flows into Egypt to bolster their ally, President Abdel-Fattah el-Sisi.
Vodafone Egypt is the largest telecoms operator in Egypt by market share and the British telecoms company was the country’s largest foreign investor.
Egypt has been a growth engine for Vodafone in the past but the group also became a lightning rod for criticism by activist groups during the Arab Spring in 2011 after its network was used to send text messages telling Egyptians to “confront the traitors and criminals” on behalf of the government, before it was turned off. The company later defended its actions saying that three of its engineers were being held hostage and that it had no choice but to comply with the law.
STC said both parties would conduct due diligence over the next 75 days and the final price would depend on the agreed terms.
The proceeds of the sale will be used to lower Vodafone’s debt. The company’s Ghanaian network, which is owned by Vodafone Group, will now report its results through the South African-listed Vodacom.