As part its economic reforms aimed at attracting private investors, the Egyptian government announced the selling of 9.5% stake (162.2 million shares) of state-owned telecommunications firm Telecom Egypt valued at $121.6 million.
In a filing with Egypt’s bourse on Sunday, the shares were priced at $3.99 per share. As part of the sale process, the government will offer a 0.5% stake for purchase by company employees until 25 May 2023.
The sale of the Telecom Egypt stake will reduce the government’s ownership to a little over 70%, down from the previous 80%, while the remaining shares will be available for trading on the Egyptian Exchange. This move not only strengthens the country’s fiscal position but also opens doors for increased private sector participation in Egypt’s telecommunications sector.
The proceeds from the stake sale will help Egypt meet its forthcoming foreign debt obligations, providing much-needed financial support. The sale of state assets has become a crucial strategy for Egypt to generate funds and foster economic stability, according to multiple media reports.
Telecom Egypt, which is the first integrated telecom operator in the country and one of the largest subsea cable operators in the region, has been identified as a strategic asset for privatization. This marks the second sale of state assets since Prime Minister Mostafa Madbouly’s pledge on April 29 this year to proceed with the sales program, aiming to sell assets worth $2 billion by the end of June.
More to Come
In fact, the Egyptian Prime Minister disclosed in February this year a list of more than 30 state-owned companies to sell to investors within the year and they included the National Company for Producing and Bottling Water (Safi) and Wataniya Petroleum Company.
The decision will provide ample space for the private sector to invest further in various sectors and it is part of the $3 billion 46-month financial support package signed with the International Monetary Fund (IMF) in December last year, which includes economic reforms aimed at fostering a favourable business environment and attracting foreign investment.
Telecom Egypt has reported a consolidated net profit attributable to the company’s owners of EGP $300 million in 2022, up 9.09% year on year (YoY) from $270 million billion in 2021.
The IMF said that stipulation that Egypt should slow down public investments and privatise state assets as the government has invested billions of dollars into massive construction projects, such as the New Administrative Capital and New Alamein City.
Egypt’s economy has been hit hard by higher oil and food prices following the coronavirus pandemic and the war in Ukraine, with the Egyptian pound weakening by more than 13% to a new low above 32 to the US dollar in January this year compared with March 2022.