Telecom Egypt Says Focus is on Growth, Not Vodafone Stake

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(Bloomberg) -- Telecom Egypt Co. has no immediate plans to sell its stake in Vodafone Egypt and will focus on growing its share of the mobile market to as much as 15 percent by 2022, the company’s senior investor relations director said.

The decision to keep or sell its 45 percent stake in Vodafone Egypt cannot be made “blindly,” Sarah Shabayek said in an interview. The state-owned firm sees no conflict of interest in holding onto the stake, despite being in competition with Vodafone, as it’s not privy to the company’s plans during board meetings, she said.

“Vodafone Egypt is a very good investment,” Shabayek. “A sale would only be considered if we reach a critical mass in the mobile market to the extent that we start cannibalizing on such investment.”

Read more: Vodafone Squeezed in Egypt as State-Backed Partner Turns Rival

Expanding Network

Telecom Egypt, the biggest internet provider in the Arab world’s most populous nation, began offering mobile services in September putting it in direct competition Orange SA and the United Arab Emirates’ Etisalat as well as Vodafone.

Since TE now offers mobile services of its own, analysts had said it would make sense to sell the Vodafone stake to help recoup the costs of acquiring its 4G license and extending its network.

Telecom Egypt aims to increase its share of the mobile market from 2 percent now to as much as 15 percent by 2022, and wants its own network to cover 50 percent of the data traffic of its clients this year, Shabayek said. The company, which is 80 percent owned by the state, is in talks with banks for a syndicated revolving loan of up to 13 billion Egyptian pounds ($730 million) to give it some flexibility in its operations, she said.

Shabayek didn’t say what market share Telecom Egypt would have to reach before its investment in Vodafone Egypt begins to lose its appeal.

The company’s shares rose by as much as 2.7 percent in trading Monday on the Cairo stock market. The stock closed 0.9 percent higher, at 13.84 Egyptian pounds per share, its highest since December 25.

©2018 Bloomberg L.P.

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