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Court Order Gives France Telecom Control of Egypt's MobiNil
Orascom Telecom has lost a legal action and been ordered to sell its entire stake in Egypt's MobiNil to France Telecom. In 2007 Orascom Telecom initiated an arbitration against France Telecom at the Arbitration Court of the International Chamber of Commerce (ICC) to try and force France Telecom to transfer its MobiNil shares to Orascom Telecom.
There have been strained relations between Orascom and France Telecom, with the latter initiating the legal action against FT in December 2007 due to disagreement over the strategy for MobiNil.
The Arbitration Court has rejected Orascom Telecom's claims and then turned the matter on its head and ordered it to transfer a large stake in MobiNil to France Telecom instead.
France Telecom says that it will be paying approximately €530 million, and will have full control over the leading mobile operator in Egypt. France Telecom will therefore be able to consolidate the entire financial results of ECMS. On the basis of the 2008 results, this represents additional annual revenues of over €360 million and EBITDA of €165 million.
The holding in the company is slightly complex.
The mobile phone network - which trades as MobiNil - is owned by a holding firm, ECMS - which is in turn owned by three parties, 20% directly by Orascom Telecom, 29% via the stock exchange and the remaining 51% is owned by a company, confusingly called MobiNil.
This holding company is in turn 71.25% owned by France Telecom and 28.75% owned by Orascom Telecom. The court ruling applies only to Orascom Telecom's 28.75% in the holding company.
After the order is carried out, France Telecom will end up with sole ownership of the holding company, and hence have a 51% ownership of the mobile network. Orascom Telecom will retain its 20% direct stake in the mobile network, and the stock market float will be unaffected.
The company is the largest operator in the market, and according to figures from the Mobile World database, has a market share of around 48%.
On the web: Mobile World - Mobinil
Posted to the site on 6th April 2009