The largest mobile network operator in Egypt, Vodafone Egypt, 20% state-held stakes will be purchased by Qatar Investment Authority for approximately $2.5 billion from Telecom Egypt. It announced in September 2022 that it is looking to collect up to $6 billion by selling holdings in state-owned companies.
In order to establish a strategic footing in the mobile telecommunications industry, state-owned Telecom Egypt, which started functioning in 1854 with the construction of the first telegraph line connecting Cairo and Alexandria, purchased its 45% investment in Vodafone Egypt.
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How Vodafone Egypt Could Benefit From This Deal
Dealing with Qatar would help Egypt’s struggling economy, which is now dealing with rising food and gasoline prices as a result of Russia’s invasion of Ukraine and a flight of foreign investors from its domestic debt. Since March 2022, there have been $22 billion in withdrawals from the local debt market.
The proposal, which would be backed by the nation’s sovereign wealth fund, may include public share offers or block sales to strategic investors, according to the planning minister of the country, Hala Elsaid.
Past Negotiations By Vodafone
The ownership of Vodafone Egypt has been changing over the last few years. Back in 2021, Vodafone Group and Vodacom Group reached an agreement to sell Vodafone Group’s 54.9% interest in the operator for ZAR 41 billion (£2.0 billion/€2.4 billion).
However, the transfer still needs additional regulatory permission and is anticipated to be finished by the end of this year. Another negotiation happened in 2020: Vodacom Group and their top shareholder, TE arrived at an agreement to revise their shareholder agreement. This happened just an afternoon after a deal to sell Vodafone’s stake to Saudi Telecom fell through that same year.
Qatar, one of the richest nations in the world thanks to its large gas reserves, is diversifying its economy in preparation for declining revenues as supplies run out, and the world moves away from fossil fuels. Let’s take a look at some of the past negotiations between the Qatar Investment Authority and other big Qatari firms.
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Qatar Investment Authority Past Negotiations
To aid Egypt in navigating the crisis, Qatar earlier this year deposited $3 billion in the Central Bank of Egypt. This same year, one of the biggest sovereign wealth funds in the world underwent a significant strategy shift when the Qatar Investment Authority sold its holdings in a number of listed businesses and invested in closely held technology companies in emerging economies.
A previous deal between the Qatari giant “Qatar Energy” and ExxonMobil provided for the acquisition of 40% of ExxonMobil’s share in an exploration field in the Mediterranean off the coast of Egypt.
Qatar stated at the end of March 2022 that it would spend more than $4.5 billion in Egypt, a country that was experiencing economic difficulties as a result of the Covid epidemic and the Russian invasion of Ukraine.
The deal, if successful, will help Egypt’s economy, which has recently been struggling as a result of global issues, most notably the conflict in Ukraine.