Orange Buys MobiNil Stake For €324Mn

VOL. XLV

No 27

8-July-2002

EGYPT

Orange Buys MobiNil Stake For €324Mn

The Egyptian Company for Mobile Services (ECMS) said on 2 July that Orange had bought a 71.25% stake in MobiNil Telecommunications (which represents 36.34% of ECMS) for €324mn from France Telecom. The acquisition values ECMS at 6.3 times the company’s EBITDA (earnings before interest, tax, depreciation and amortization) in 2001. Orascom Telcom Holding owns 28.75% of MobiNil, which represents 14.66% of ECMS, and also holds another 16.6% of ECMS directly. The remaining 32.4% of ECMS is free floating. Orange’s purchase is in line with the intentions expressed by the parties at the time of Orange’s IPO in February 2001.

“Together Orange and Orascom Telecom Holding constitute an unmatched blend of expertise and can certainly derive a greater degree of synergy bringing the greatest value to our customers and to the Egyptian market,” said 'Uthman Sultan, the chairman of MobiNil and president and CEO of ECMS. The deal could bring about a shift in branding from “MobiNil” to “Orange,” a possibility raised, but not confirmed, by Mr Sultan at MobiNil’s last conference call. However, the deal is unlikely to have any significant effect on the company’s overall performance, according to local economists. “The company has been getting all the technical assistance it needs from France Telecom and will continue to get that support from Orange, so I don’t see any value added on that front,” commented 'Amr Sultan, an associate at HC Brokerage.

MobiNil was founded in May 1998 by France Telecom, Motorola and Orascom Telecom, and acquired 51% of ECMS. Motorola exited the consortium in December 2000. ECMS, which is listed on the Cairo and Alexandria Stock Exchange, had 2.1mn active subscribers in Egypt as of 31 March. Orange is an international telecom company with 40.5mn customers worldwide and has extensive operations in both the UK and France. Orascom Telecom is the largest independent GSM operator in the Middle East and Africa (MEES, 17 June).