STC's Vodafone Egypt deal postponed - again
Saudi Telecom Company (STC) has extended the deadline for the finalisation of its buyout of Vodafone Group's shares in Vodafone Egypt.
Citing COVID-19, the company issued a statement which reads: “Due to the logistical challenges caused by the COVID-19 pandemic, the parties need more time to complete the processes related to the transaction, including the due diligence.”
It announced that the parties involved have agreed to extend the memorandum of understanding (MoU) regarding the deal for 60 days beginning 12 July 2020.
In January 2020, STC signed a non-binding MoU for the acquisition of a 55% stake in Vodafone Egypt valued at US$2.4-billion.
In April 2020, ITWeb Africa reported the finalisation of the deal was extended by 90 days with STC citing challenges posed by the COVID-19 pandemic.
According to the initial announcement, the transaction ought to have been completed in June 2020 and would have made STC the majority shareholder in Vodafone Egypt while Telecoms Egypt controls the remaining 45% stake.
STC’s interest in acquiring the stake is fuelled by ambition to expand in the Middle East North Africa (MENA) region and further explore the opportunity to acquire a 4G license.
"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 Saudi Arabia, but also in the wider region,” said Nasser al Nasser, CEO of STC.
With agreement over the deadline extension in place, the long-term Partner Market Agreement which Vodafone and Saudi Telecoms entered into, will ensure that Vodafone's exit or the encountered delay in transaction completion, will not lead to the immediate termination of the use of the Vodafone brand.
For Vodafone Group, the extension of its planned exit of its Egypt subsidiary will delay the completion of the group's efforts to simplify across two differentiated, scaled geographic regions – Europe and Sub-Saharan Africa.
“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," said Vodafone Group CEO Nick Read.