France Telecom Wants Egypt’s Mobinil

France Telecom SA has revealed that it will spend up to 1.5 billion Euros to raise its stake in the Egyptian mobile operator Mobinil to 95% in an effort to spread into emerging markets.

The French telecom company agreed on a deal with its Egyptian partner, Orascom Telecom Holdings, over the two business’s joint venture Egyptian Company for Mobile Services (ECMS), which operates the Mobinil mobile phone network.

France Telecom has decided to purchase all but 5 percent of ECMS from Orascom at 202.5 Egyptian pounds per share.  Orascom owns 20 percent of ECMS directly and 28.75 percent through the joint venture with France Telecom.  FT had a 51 percent majority holding.  After purchasing the rest from Orascom, FT will launch a tender offer for the remaining stock listed on the exchange, about 29 percent of the company.

If all the shares are tendered, France Telecom will spend 1.5 billion Euros on the buyout.  France Telecom will own 95 percent of ECMS, but Orascom will retain 30 percent of voting rights.

France Telecom pursued this deal because it is looking to consolidate its position in Egypt as it seeks to expand into emerging markets to counteract the currently troubled market in Europe.  European mobile networks are facing problems in Europe because of the popularity of internet-connected phones.  France Telecom has been looking to acquire companies in Africa and the Middle East in an effort to double its revenue in MENA by 2015.

However, France Telecom has run into problems with its MENA subsidiaries.  Last year, during Egypt’s revolution, the Egyptian army forced Mobinil to send text messages to its government, instructing them not to protest against the government.

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