Vodafone Group is reportedly in talks to sell its 55 per cent stake in Vodafone Egypt Telecommunications Co., for an estimated £3 billion.
According to a report in the Financial Times, the UK-based company was approached by Telecom Egypt, which already owns 45 per cent of EgyptÔÇÖs second-largest mobile phone operator, about selling its stake.
A sale would align with VodafoneÔÇÖs strategy to trim assets and cut costs as it attempts to offset falling demand in Europe for telecommunications services.
Earlier this week, the group said it will focus on developing its businesses in Europe, sub-Saharan Africa and India, and that it would consider the case for disposing of some of its minority stakes in mobile operators, as well as selling some of its controlled assets.
However, the FT said that competition in Egypt, where 70 per cent of the population owns a mobile phone, may increase following the resolution of a legal dispute over ownership of the countryÔÇÖs biggest mobile operator.
Last month, France Telecom and Orascom Telecom settled a two-and-a-half-year legal battle over their ownership of Mobinil. The end to the feud will mean that Mobinil can now become more aggressive in the marketplace.
The newspaper said that the talks between Vodafone and Telecom Egypt, which is the countryÔÇÖs biggest landline phone company, began about a month ago.
Telecom Egypt indicated in October that it was interested in upping its stake in Vodafone Egypt and was also on the lookout for acquisitions. It is thought to be keen to boost its presence in the mobile market to counter the effect it has had on its landline revenues.
If the deal with Vodafone falls through, Telecom Egypt may seek its own wireless licence.
Vodafone Egypt competes with Mobinil, which is EgyptÔÇÖs biggest wireless carrier, and Etisalat Misr, which is owned by the UAEÔÇÖs leading phone company.
Vodafone Egypt generated £488 million of operating cash flow in 2009-10. The company employs 6,000 people and serves more than 20 million customers across Egypt.
Launched in 1998, the company offers an array of voice and data exchange services, as well as 3G, ADSL and broadband internet services.
As of the end of December last year, Telecom Egypt had 9.6 million subscribers and a net profit after tax of EGP 3.05 billion (approximately ┬ú375 million)ÔÇöan increase of 9.4 per cent compared to the same period a year earlier.
The company also had 625,249 broadband subscribers through its internet subsidiary, TE Data, which translates to a 61 per cent market share of broadband internet access in Egypt.
