Egypt's Orascom Telecom to split following Vimpelcom deal
Merger to create one of world's biggest mobile operators set to boost shares in sector
Ahram Online + Agencies, Monday 28 Mar 2011
Egypt's leading Orascom Telecom announced Monday it is seeking to increase its authorised capital to 14 billion Egyptian pounds from LE7.5bn as it splits into two companies following a merger with Russian telecoms giant Vimpelcom.
Orascom Telecom (OT) will call a general meeting on April 13 to approve the company split as well as the capital increase, which it said it would use to fund its debt, but did not give any further details.
"The split into two companies will lead to increased transactions on OT stock, raising the attractiveness of investment," said Mohsen Adel, a financial analyst, who expects the division to be completed in the second or third quarter of 2011.
Ashraf Akhnoukh, senior trader at the Commercial International Brokerage Company, agrees. "Today's news about Orascom encouraged traders' interest in the telecommunications sector," he said.
OT shares slipped 0.9 per cent on Monday trade on Egypt's stock market but the EGX30's biggest gainer was OT's mobile subsidiary Mobinil, up 10 per cent.
OT says it will refinance the company's debt from banks and financial institutions and will halt trading of stocks and GDR certificates seven days after it gets refinancing approval.
Shareholders of Russian mobile operator Vimpelcom earlier this month approved a US$6 billion-plus purchase of Wind Telecom, which owns OT, creating one of the world's biggest mobile operators by number of subscribers.
OT said on Monday the Vimpelcom deal would improve its negotiating position with the Algerian government over the fate of its unit in the country.
The firm has been locked in a long-running dispute with Algeria over the unit, Djezzy, its biggest single source of revenue, and uncertainty over its future had complicated the Vimpelcom deal.
Algeria's government, which said it will nationalise Djezzy, has hit the unit with hundreds of millions.