Speculation in the marketplace is that pan-African mobile provider MTN Group is in talks with Orascom Telecom Holdings (OTH) to purchase its shareholding in Mobinil.
Mobinil is an Egyptian mobile operator and one of that country's five largest companies by market capitalisation.
It was founded in 1998, with OTH effectively holding a 33.1% stake and partner France Telecom a 36.3% stake, with the remainder in free float. Mobinil has a 32% mobile penetration level in the country, which has a population of 74 million.
It is unclear whether MTN would purchase all of OTH's shareholding in Mobinil, or whether MTN will become a third, minority partner.
MTN would neither confirm nor deny talks are taking place. However, spokesman Nozipho January-Bardill says: "In line with its vision to be the leading provider of telecommunications services in emerging markets and to consolidate its position, the MTN Group continues to seek appropriate, value-enhancing expansion opportunities that meet its investment criteria."
A good fit
Analysts agree a potential transaction between OTH and MTN is not far-fetched and would make sense, as both companies would benefit considerably from a strategic relationship.
They would also profit from a deal that includes a strategic partnership, say analysts. "It would be a good fit and MTN would gain access to OTH's lovely footprint in North Africa," says BMI-TechKnowledge senior analyst Richard Hurst.
Hurst and Afrika Analysis analyst Dobek Pater agree that a transaction between MTN and OTH in that region would potentially be a merger, rather than an outright sale of shares.
MTN previously attempted to enter the Egyptian market, says Pater. However, the licence was too expensive and it would have been difficult for the mobile operator to gain a good return on its investment in a speedy manner, he says.
A deal with OTH would make strategic sense for MTN, as Egypt has fairly good average revenue per user, and would provide a bridge between Africa and the Middle East for MTN, he notes.
A financial analyst, who spoke on condition of anonymity, cites recent OTH transactions where the company sold some operations that are not core to its focus.
Last week, OTH announced it had completed the sale of its Iraqi business to MTC-Atheer and the sale of its entire stake in Hutchison Telecommunications. OTH is owned by the Sawiris family, and is headed by Naguib Sawiris, a prominent Egyptian billionaire and businessman.
"It certainly appears that the family is trying to clean up their investment portfolio and their main focus is in Pakistan," the financial analyst says.
Pater agrees, noting that OTH previously said it was consolidating its position in North Africa and Arabic countries.
Related stories:
MTN to shed R2.4bn Nigeria stake?
MTN pours $2bn into Nigeria
MTN, Moov give in to Benin
Share