Saudi Telecoms has taken a step closer to purchasing Vodafone's 55% stake in Vodafone Egypt for US$2.39-billion.

According to a joint statement by Vodafone and Saudi Telecoms, the companies have entered into a long-term Partner Market Agreement in which Vodafone's exit will not lead to the immediate termination of the use of the Vodafone brand.

The agreement also entails preferential roaming arrangements, access to Vodafone's central procurement function, and other services.

Nasser al Nasser, chief executive officer of Saudi Telecoms said: "The potential acquisition of Vodafone Egypt is in line with our expansion strategy in the MENA region. The transaction, which is still subject to a detailed due diligence, confirms STC's eagerness to maintain a leadership position not only in the KSA, but also in the wider region. Vodafone Egypt is the leading player in the Egyptian mobile market and we look forward to contribute further to its continuous success."

The deal, if completed, will bring Vodafone Egypt's valuation to US$4.35 billion, which is seven times the operator's EBITDA for period ending in September 2019.

Nick Read, chief executive officer of Vodafone Group said the transaction is consistent with Vodafone's efforts to simplify the Group across two differentiated, scaled geographic regions – Europe and sub-Saharan Africa.

"Additionally, it will reduce our net debt and unlock value for our shareholders. We look forward to continuing our close relationship with the business through a Partner Market agreement, and building on our significant shared service operations in Egypt, known as Vodafone Intelligent Solutions," Read said.

Vodafone stated that it is not entirely pulling out of Egypt as its shared services centres or Vodafone Intelligent Solutions employs over 7,800 individuals in Cairo, Giza, and Alexandria, and will continue to operate and provide a range of services to Vodafone's operations globally.

Vodafone also revealed plans to recruit an additional 1,000 people for the centres in the next twelve-to-eighteen months.

The remaining 45% in Vodafone Egypt is owned by Telecom Egypt and the company's management said there are no plans to sell its stake.

This development was well received on the stock market as Telecom Egypt's shares rose by 4% following the company's announcement.

The transaction is expected to close by the end of June 2020 and is subject to regulatory approval.