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Tuesday, 8 June 2021

Hello, cash cow

Vodafone Egypt will make a one-off EGP 10 bn dividend payout this year as part of a modified shareholder agreement signed by Vodafone Group and Telecom Egypt (TE) yesterday, TE said in a statement. This includes the EGP 2 bn cash dividend Vodafone Egypt made earlier in the year, EGP 900 mn of which went to TE. The remaining EGP 8 bn will be paid out later in 2021.

And there are permanent changes to dividends going forward: Vodafone Egypt will pay out a minimum 60% of its cashflow in dividends in the future, according to the new terms of the agreement.

What else is changing? Vodafone Group now has the right to transfer its 55% stake in Vodafone Egypt within the wider group, while TE has received “certain enhanced minority rights including access to information.”

Advisors: Al Tamimi & Company advised TE in its negotiations with Vodafone Group, the law firm said (pdf).

What’s going on here? The law firm said that the agreement has been three years’ in the making, and aims to promote “mutual protection … and exit rights” for both shareholders. Vodafone, TE and Al Tamimi were all unavailable for comment on the new agreement.

This comes six months after Saudi Telecom’s (STC) bid to buy Vodafone Group’s stake ended in failure. Vodafone Egypt was the subject of a drawn-out acquisition bid from STC, which was in talks with Vodafone Group to acquire its majority stake for USD 2.4 bn for most of last year. Negotiations ended without an agreement in December for unknown reasons.

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