Egyptian Government Considers Part-Stake Sale in Telecom Egypt

The Egyptian government appears to be attempting to raise cash through the telecoms sector as, according to Reuters, its most recent announcement is to sell part of its 80% stake in Telecom Egypt. Commenting on the announcement, Communications Minister Tarek Kamel said, "When I was asked a question on whether it was possible to put an additional stake from Telecom Egypt on the stock exchange in the future, my response was yes, dependent on ongoing studies with experts and consultancies." This comes shortly after the government announced at the beginning of the year that it is considering a fourth mobile licence (see Egypt: 22 January 2010: Egyptian Government Considers Fourth Mobile Licence). At present, both options are still in consideration and further studies need to be carried out.

Outlook and Implications

If the government is intending to raise finance through the telecoms sector, a stake sale in Telecom Egypt would be a logical choice. The introduction of a fourth mobile operator will change the market dynamics significantly and result in a serious price crash for mobile services. Prices are already among the lowest in the region and likely to fall further as mobile penetration in Egypt is still among the lowest in the MENA region at 76%.

In 2005, the government sold off 20% of the operator by way of an initial public offering at a price of around E£2.30. Currently, the company is valued at around E£20 per share. Investment in the operator should remain stable as long as there is no further competition in the fixed-line sector. Fixed-line penetration has been fairly stable at around 20%, but this is still very low for the region.