M&A WATCH- Is Telecom Egypt serious about a Vodafone Egypt takeover? Telecom Egypt (TE) could be about to thwart Saudi Telecom’s (STC) attempt to buy Vodafone Group’s 55% stake in Vodafone Egypt if a local press report yesterday is accurate. The story quotes sources allegedly close to the matter as saying that five banks are on board to finance the transaction. TE owns a 44.8% in the UK company’s Egypt arm and is able to counter any offer by STC with a bid of its own thanks to its shareholder agreement with the parent company. The lenders, which include Mashreq Bank and First Abu Dhabi (FAB), could help fund the transaction, which would see the state-owned landline monopoly merge its existing network WE with Vodafone. The company’s advisors — EFG Hermes and Citibank — are currently studying the potential acquisition.

TE’s debt burden might not be as much of a hindrance as some thought: Doubts have been raised about TE’s ability to buyout Vodafone’s stake due to its almost-EGP 17 bn debt pile. But sources said yesterday that the company could refinance its existing obligations under new terms, paving the way for a potential takeover.

STC is by no means out of the running: Reports that TE could move to purchase the stake came a day after an MoU signed between STC and Vodafone Group expired without an agreement “due to misalignment with relevant parties.” The talks became more complicated after STC reportedly asked to lower its initial USD 2.39 bn offer as its finances came under pressure due to slumping oil prices and the covid-19 pandemic. Discussions are still ongoing “to finalize the transaction in the near future,” Vodafone said in an update yesterday, adding that STC has “substantively” completed due diligence.