Gov’t could sell 10% of Telecom Egypt
Is TE the latest addition to Madbouly’s privatization list? The government is reportedly planning to sell a 10% stake in state-owned Telecom Egypt (TE), Reuters reports, citing unnamed sources it says have knowledge of the matter. The government currently holds 80% in the EGX-listed company, with the rest in freefloat, according to TE’s website. The transaction would be worth some EGP 4.6 bn at TE’s current share price. ِA TE spokesperson declined comment when approached by Youm7.
Advisors: The government tapped CI Capital and Al Ahly Pharos to manage the transaction, according to Reuters.
The TE stake is likely to go to a local investor: The 10% stake will be offered to both Egyptian and foreign investors but “appetite from foreign investors seems low,” the source told Reuters.
REMEMBER- Strategic investors — including Gulf sovereign wealth funds, who are a key target market for the government’s stake sales — tend to prefer to buy significant stakes in companies so they can play a leading role in helping them restructure and grow. In one example, talks with Qatari wealth fund QIA to buy part or all of TE’s 45% stake in Vodafone Egypt have reportedly stalled because the Madbouly government doesn’t want to cede more than 25%.
We didn’t see this coming: There’s been no mention of TE ever being part of the government’s privatization program and it was not named on Prime Minister Moustafa Madbouly’s list of 32 state-owned companies earmarked for privatization.
Plan B: The government will look to raise funds from an issuance of future flow securities if it is unable to sell shares to an investor, a source reportedly told Asharq Business. A source at the company told us in January that future flow securitization was on the table.
TE saw steady growth last year: TE’s net income grew 9% y-o-y to EGP 9.2 bn in 2022, according to the company’s earnings release (pdf) out yesterday. The firm reported EGP 44.3 bn in revenues during the year, up 19%.
Market reax: TE’s share price lost 3.7% to settle at EGP 26.76 a piece on yesterday’s close.