Orascom Buys Stake in Hutchison Telecom
Egypt's Orascom Telecom has purchased a 19.3% interest in Hutchison Telecom from its parent company, Hutchison Whampoa for a total purchase price of US$1.3 Billion. The two companies have also signed a co-operation agreement to align their respective procurement processes to exploit synergy benefits fully between their businesses, including in relation to network equipment and software procurement, IT procurement, international roaming and transmission costs.
The combined geographic footprint of Orascom Telecom and Hutchison Telecom includes important interlocking adjacent markets such as Orascom Telecom's operations in Pakistan and Bangladesh and Hutchison Telecom's operations in India and Sri Lanka. On a combined basis, Orascom Telecom and Hutchison Telecom control mobile operators in fifteen countries representing a licensed area covering roughly 2.0 billion people. The two Groups together served over 40 million mobile subscribers as at September 30, 2005.
Merrill Lynch noted in a research paper, that although the transaction arguably can potentially enhance Hutchison Telecom's expansion plan in the Middle East, they believe the transaction is one of Hutch's typical "buy low, sell high" asset tradings.
Under the Shareholder Agreement, Orascom Telecom will nominate two non-executive directors to the nine member board of Hutchison Telecom, which will be also include two non-executive directors nominated by HWL, two executive directors, and three independent non-executive directors. In addition, Orascom Telecom will have representation at the operating subsidiary Board level in Hutchison Telecom's most populous and fastest growing markets."
Posted to the site on 23rd December 2005
