Vodafone streamlining points to exit from Egypt
Friday 21 May 2010 19.57 BST
Vodafone could pull out of Egypt in a £3bn deal that would allow the company to focus itsactivities on Europe, sub-Saharan Africa and India.
Thecompany is also understood to have closely examined the future of itsshareholding in ChinaMobilewhich, while a mere 3%, is worth $6.5bn (£4.5bn), as ittries to raise money to meet the rising cost of mobile phone spectrum in otherareas of its business.Chief executive Vittorio Colao, however, has decided to keep hold of it for nowas it has continued to increase in value.
Thefuture of the company's 55% stake in Vodafone Egypt is less clear cut. Thecompany's partner in the country, state-owned Telecom Egypt, is understood tohave made an informal approach to buy the business. Telecom Egypt, which is theonly fixed-line telecoms player in the country and already owns the other 45%, has made nosecret of its desire to increase its exposure to the fast growing mobile phonemarket.It is also discussing with the Egyptian government the possibility of afourth mobile phone licence being made available in the country.
VodafoneEgypt is the number two player in the country, behind Mobinil, and EtisalatEgypt. Until recently, Mobinil was being fought over by France Telecom andOrascom in a protracted and complex legal fight. But in April the Egyptiangovernment helped broker a peace deal which should mean that Mobinil will beable to be more aggressive in the market. Vodafone declined to comment.
UnlikeVodafone's more mature markets of western Europe, where everyone already has aphone, penetration in Egypt is running at about three-quarters of thepopulation. Prices and margins, however, are already coming under fiercepressure so an early exit might suit Vodafone.
Anycash injection would also come as Vodafone faces a hefty bill for mobile phonespectrum in Europe and India at a time when it has promised shareholders thatit will raise its dividend by at least 7% annually over the next three years.While it expects to generate an annual £7bn in cash, the need to buy morespectrum means that dividend payments will not always be covered by earnings.
Thisweek the Indian auction for licences to operate 3G services came to an end,having raised upwards of $15bn for the government – twicewhat it was expecting. Vodafone was left with a bill of 116.18bn rupees($2.5bn) but no bidder won spectrum across the sub-Continent. The Indiangovernment has also suggested that it might levy further charges on thespectrum that the country's mobile phone operators already own: something whichVodafone has made clear it will fight very hard to prevent.
Lastweek Germany's Federal Network Agency finished the auction of a new slice ofthe airwaves. The auction raised €4.38bn (£3.8bn), with Vodafone spendingthe most – €1.42bn. The British government is expected toauction the same spectrum, the part of the airwaves that will be vacated by2012 when the analogue TV signal is switched off, next year.
Friday 21 May 2010 19.57 BST
Vodafone could pull out of Egypt in a £3bn deal that would allow the company to focus itsactivities on Europe, sub-Saharan Africa and India.
Thecompany is also understood to have closely examined the future of itsshareholding in ChinaMobilewhich, while a mere 3%, is worth $6.5bn (£4.5bn), as ittries to raise money to meet the rising cost of mobile phone spectrum in otherareas of its business.Chief executive Vittorio Colao, however, has decided to keep hold of it for nowas it has continued to increase in value.
Thefuture of the company's 55% stake in Vodafone Egypt is less clear cut. Thecompany's partner in the country, state-owned Telecom Egypt, is understood tohave made an informal approach to buy the business. Telecom Egypt, which is theonly fixed-line telecoms player in the country and already owns the other 45%, has made nosecret of its desire to increase its exposure to the fast growing mobile phonemarket.It is also discussing with the Egyptian government the possibility of afourth mobile phone licence being made available in the country.
VodafoneEgypt is the number two player in the country, behind Mobinil, and EtisalatEgypt. Until recently, Mobinil was being fought over by France Telecom andOrascom in a protracted and complex legal fight. But in April the Egyptiangovernment helped broker a peace deal which should mean that Mobinil will beable to be more aggressive in the market. Vodafone declined to comment.
UnlikeVodafone's more mature markets of western Europe, where everyone already has aphone, penetration in Egypt is running at about three-quarters of thepopulation. Prices and margins, however, are already coming under fiercepressure so an early exit might suit Vodafone.
Anycash injection would also come as Vodafone faces a hefty bill for mobile phonespectrum in Europe and India at a time when it has promised shareholders thatit will raise its dividend by at least 7% annually over the next three years.While it expects to generate an annual £7bn in cash, the need to buy morespectrum means that dividend payments will not always be covered by earnings.
Thisweek the Indian auction for licences to operate 3G services came to an end,having raised upwards of $15bn for the government – twicewhat it was expecting. Vodafone was left with a bill of 116.18bn rupees($2.5bn) but no bidder won spectrum across the sub-Continent. The Indiangovernment has also suggested that it might levy further charges on thespectrum that the country's mobile phone operators already own: something whichVodafone has made clear it will fight very hard to prevent.
Lastweek Germany's Federal Network Agency finished the auction of a new slice ofthe airwaves. The auction raised €4.38bn (£3.8bn), with Vodafone spendingthe most – €1.42bn. The British government is expected toauction the same spectrum, the part of the airwaves that will be vacated by2012 when the analogue TV signal is switched off, next year.
No comments:
Post a Comment