FT and OTMT reach preliminary deal over MobiNil shareholdings

13 Feb 2012

European telecoms major France Telecom (FT) has reportedly reached a preliminary agreement with Orascom Telecom Media and Technology Holding (OTMT) regarding the acquisition of the latter’s stake in Egyptian Company for Mobile Services (ECMS), which operates under the MobiNil banner. According to Bloomberg, the French company has announced that it will pay EGP202.5 (USD33.54) per share for the stake in MobiNil currently held by Naguib Sawiris-controlled OTMT. It is also understood that FT will offer that same price for those MobiNil shares currently traded on the Cairo bourse as part of a tender offer to be made at some point in the near future, while Sawiris is expected to retain a 5% ‘economic interest’ in the Egyptian cellco.

According to TeleGeography’s GlobalComms Database, MobiNil is currently owned by MobiNil Telecom (51.03%) and OTMT (20%), with the remaining 28.97% publicly floated. MobiNil Telecom is itself owned by FT subsidiary Orange (71.25%, corresponding to a 36.4% stake in ECMS) and Orascom (28.75%, representing a 34.6% holding in ECMS). OTMT and FT have endured something of a rocky relationship in recent years, with animosity between the two telecoms groups stemming from a shareholders’ agreement signed in August 2001 that related to the options of either shareholder for buying out the other’s holding in case of a ‘serious disagreement’. April 2010, however, saw the two stakeholders announce that the dispute had been resolved, with the duo agreeing to retain MobiNil’s corporate structure, as well as existing voting rights in the cellco. Further, under the deal it was agreed that local internet service provider LINKdotNET Egypt, at the time a wholly-owned OTH subsidiary, would be integrated into MobiNil, while FT agreed to change its accounting methods to fully consolidate MobiNil. May 2010 subsequently saw further details of the agreement released, with FT confirming it would fully consolidate results from MobiNil after agreeing to pay OTH USD300 million to cover the termination of the previous shareholders’ agreement and compensate for the Egyptian group no longer being able to consolidate MobiNil’s results. As part of the revised shareholders’ agreement, both FT and OTMT also agreed not to transfer each other any other shares in MobiNil Telecom, while OTMT said it would not raise its direct stake, with the Egyptian group being granted a put option for both its direct stake and its holding in MobiNil Telecom.