CAIRO (AP) — The Saudi Telecom Co. announced it reached a preliminary agreement on Wednesday to buy a 55% stake in the Egyptian holdings of telecommunications giant Vodafone.
The kingdom's largely state-owned communication firm announced that it had offered $2.39 billion in cash for the Egypt unit, as part of its continued efforts to carve out more market share in the Middle East. The Saudi Telecom statement valued Vodafone Egypt at $4.4 billion.
The prospective deal “confirms STC’s eagerness to maintain a leadership position not only in the Kingdom of Saudi Arabia, but also in the wider region,” said Telecom's chief executive, Nasser al-Nasser.
The British-based Vodafone is one of the world’s largest cellphone operators and the top provider in Egypt, with over 40 million Egyptian subscribers.
Nick Read, CEO of Vodafone, said the transaction would guide the company to strong earnings, deliver shareholder value and reduce overall debt.
“Under STC, I believe they will continue to flourish,” he said of holdings in Egypt, adding that everything about the brand would stay the same under the new owners.
Vodafone has been looking to streamline its holdings and focus more on battling competition and strengthening investment in Europe and sub-Saharan Africa.
Alexander Fruman, president of Vodafone Egypt, said the company still considers its Egypt unit a strong performer.
In a press conference, he described the transaction as a “huge sign of confidence about Egypt and the Egyptian economy" from foreign investors.
Egypt's sluggish economy is still recovering from years of turmoil following the 2011 popular uprising that toppled longtime autocrat Hosni Mubarak. General-turned-president Abdel Fattah el-Sissi rose to power in 2013 and has promoted economic reforms to attract foreign investors.
The deal is expected to close in June.