Thursday, 15 April 2010 at 08:31, Bloomberg
France Telecom SA and Orascom Telecom Holding SAE agreed to end a 2 ½-year-old legal dispute over their ownership of the Egyptian Co for Mobile Services, Hani Serie-el Din, Orascom’s lawyer, said.
The two companies, which jointly control the telecom operator better known as Mobinil, will implement a new shareholder agreement without changing the company’s ownership structure, the companies said in a separate statement.
“We have agreed to end the legal dispute,” Serie-el Din said in Cairo after a meeting on Wednesday between the two companies.
The accord puts into question France Telecom’s plan to buy out minority shareholders in Mobinil, Eqypt’s largest mobile- phone operator by subscribers. The move would have brought France Telecom Chief Executive Officer Stephane Richard closer to his ambition of doubling emerging markets sales in the next five years. Richard said in an interview this month that France Telecom may spend as much as €7 billion ($9.6bn) on deals in Africa and the Middle East in that period.
France Telecom owns about 71 per cent of Mobinil Telecom, which controls Egyptian Co for Mobile Services with a 51 per cent stake. Orascom owns 29 per cent in Mobinil Telecom and 20 per cent in Egyptian Co.
France Telecom was told by regulators it had to bid for the outstanding shares of Egyptian Co to implement an arbitration ruling to buy Orascom’s stake in Mobinil Telecom.
France Telecom had said it would pay 245 Egyptian pounds apiece for about 49 million shares owned by minority investors, a price Orascom rejected as too low. On April 10, an Egyptian court ruled that France Telecom’s $2.2bn bid for minority shares in Mobinil was too low, because it was less valuable than an offer made to Orascom in an arbitration accord last year.
“We needed a clear and sufficient agreement and this is very good,” said Khaled Bichara, chief executive officer of Orascom, at a media conference after his meeting with Jean Yves Larrouturou, France Telecom’s deputy chief executive officer, on Wednesday.
France Telecom will change its accounting method to fully consolidate Mobinil under the agreement, which will also “avail Orascom operational rights commensurate with its co-owner and strategic partner position, in addition to minority protection and liquidity rights,” according to the statement. Orascom will consolidate its participation in Mobinil through “equity method.”
Cairo-based Orascom, headed by Egyptian billionaire Naguib Sawiris had said it won’t sell its stake at the earlier offered price.
France Telecom and Orascom, whose Egyptian partnership goes back to 1998, had been locked in an ownership dispute since December 2007.
The agreement, which will be completed in the coming weeks, include settlements for all the disputes between the shareholders, the statement said.
Lazard Ltd advised France Telecom and Orascom.
Shares of the Egyptian Co for Mobile Services closed 2.9 per cent higher to 226.02 at the close in Cairo today, valuing the company at £22.6bn ($4.1bn).
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