France Telecom subsidiary Orange is to spend 1.5 billion euros ($1.98 billion) for full control of its Egyptian subsidiary MobiNil/ECMS, it said on Thursday.
The move is in line with an agreement with its local partner Orascom which was announced in February, the statement said.
Orange will pay Orascom 6.0 billion Egyptian pounds (755 million euros) for most of Orascom’s shares in holding company MobiNil, which is not listed on the stock exchange and in its quoted operating business Egyptian Company for Mobile Services (ECMS).
Orange will also acquire via a public offer the 29.0 percent of ECMS held by the public.
France Telecom was already the biggest shareholder in MobiNil, and Egypt is a key part of its effort to expand in high-growth emerging markets in Africa and the Middle East.
This accord simply recasts the terms of its relationship with Egyptian tycoon Naguib Sawiris, who had put option to sell out completely to France Telecom starting September 2012.
Sawiris will instead sell much of his stake, and the minority shareholders of listed holding company ECMS can choose to keep their shares or accept a tender offer from France Telecom.
France Telecom would end up owning 95 percent of Egypt’s largest mobile operator if all the minority shareholders accept, while Sawiris would keep 5 percent.
The Egyptian side will retain six of 13 seats on the board and the same voting rights as before.
The deal is subject to regulatory approval in Egypt.
The new accord will also put in place a new system of calls and propose options through 2017 to set terms under which Sawiris’ OTMT can exit in the coming years.
MobiNil was the subject of a drawn-out legal fight between Sawiris and France Telecom several years ago that ended in April 2010 with a new shareholders’ agreement.
France Telecom has long said that keeping a local partner in MobiNil was important so as to be seen positively by consumers.