Telecom Egypt (TE) and Vodafone Group have inked a modified shareholders’ agreement which includes changes to Vodafone Egypt’s dividend policy.
According to the agreement, Vodafone Egypt will pay a one-time dividend of EGP 10 billion to its shareholders during the 2021 calendar year, EGP 2 billion of which was paid in March.
The two sides have also agreed on a minimum dividend pay-out ratio of 60 percent of free cash flow going forward.
The agreement gives Vodafone Group the right to transfer its shareholding in Vodafone Egypt within the broader Vodafone Group.
Also, TE keeps its existing rights in the agreement and has obtained certain enhanced minority rights, including access to information.
“We are pleased to have reached an agreement that is mutually beneficial to both parties. Telecom Egypt has been and continues to be a strategic partner to Vodafone Group in the Egyptian market”, said Adel Hamed, TE’s managing director and CEO.
He added that the agreement guarantees the preservation of our strategic partnership in light of an enhanced shareholders’ agreement that provides TE with visibility on its investment and its expected returns based on Vodafone Egypt’s performance.
It also gives TE’s shareholders comfort that participation in the company continues to be fruitful and rewarding, according to Hamed.
He noted that TE plans to utilise the cash inflow from the dividend to be received in 2021 to deleverage its balance sheet, reduce financing expenses, and enhance profitability.
In March, Vodafone Egypt approved a dividend of EGP 2 billion, of which TE’s share amounts to EGP 0.9 billion.
Accordingly, TE’s board of directors proposed raising its dividend for FY 2020 to EGP 0.75 per share instead of EGP 0.50 per share, a 50 percent increase on the previously proposed dividend, representing 50 percent of Vodafone Egypt’s distribution to TE and a total pay-out ratio of 86 percent for TE.