Ft and Orascom Plan to Resolve Dispute Over Mobinil

France Telecom and Orascom Telecom Holding have presented a joint plan to resolve their long running and acrimonious dispute over the ownership of Egyptian mobile network, Mobinil. The agreement, which has been signed today and will be finalized over the coming weeks, will effectively bring to an end all disputes in relation to their joint investment in Mobinil.

In a statement, FT said that the two groups will continue their partnership on a renewed basis going forward, implementing a revised shareholder agreement but with no change to the existing ownership structure or their shareholders' voting rights.

The agreement also includes the integration of LINKdotNET - the leading ISP in Egypt - into their holding company, ECMS, allowing the company, subject to the approval of its corporate bodies, to extend broadband and corporate communications services to its 26 million customers; and create value for its shareholders and its 3,500 employees. Dr. Tarek Kamel, the Minister of Communications and Information Technology welcomed this step as the merge between the mobile services and internet services.

Stephane Richard, CEO of France Telecom, said: "I am very satisfied that we have reached an agreement with an entrepreneur such as Naguib Sawiris. Our two groups will now be able to continue working together in order to further contribute to the development of telecommunications services and information technology in Egypt. This market is very important for France Telecom and we will continue to invest and contribute our know-how in the years to come. In addition, this will also reinforce our commitment to maintain a strong R&D and Orange Business Services presence in Egypt."

As a result of the amended shareholder agreement, France Telecom will change its accounting method and will fully consolidate ECMS (ECMS was consolidated through proportional integration in 2009 and before).

The amended shareholder agreement will avail Orascom Telecom Holding operational rights commensurate with its co-owner and strategic partner position, in addition to protection and liquidity rights. Going forward, Orascom Telecom Holding will consolidate its participation in ECMS through equity method.

The outlined agreement will include settlements for all the disputes between the shareholders, the details of which will be communicated once the comprehensive agreement has been finalized.

Court Blocks FT Share Offer For Mobinil

 The Egyptian Administrative Court has blocked a tender offer by France Telecom for shares in Egypt's Mobinil, citing principles of transparency and equal opportunity. At the heart of the matter is a long running dispute between France Telecom and Orascom Telecom Holding over control of the Egyptian mobile network operator.

Last March, ­the Arbitration Court of the International Chamber of Commerce ruled in favor of France Telecom, which has a 71.25% stake in a holding company, also called Mobinil, authorizing it to acquire the 28.75% interest in Mobinil held by Orascom Telecom.

Mobinil owns 51% of ECMS, Egypt's leading mobile operator, which markets its services under the Mobinil brand. This company is listed on the Cairo and Alexandria stock exchange. Orascom Telecom directly owns a 20% stake in ECMS.

Last December, the Egyptian Financial Supervisory Authority approved a tender offer from France Telecom for ECMS outstanding shares at EGP245 each. Orascom has appealed the offer to the court, saying the price is lower than the EGP273 originally agreed to by the international arbitrator. However, the arbitrator had also said that a lower figure could be offered, if France Telecom is able to justify the difference.

Egyptian Court Rules Against France Telecom

With the blocking of France Telecom’s offer for minority stakes in
the Egyptian mobile operator by Egyptian court, all hopes of the
operator to take full control of ECMS were dashed. The decision was
taken after the price of €1.5bn offered by France’s group to for
outstanding stakes in ECMS, due to expire on Thursday was considered to
be too low.
The decision is pronounced as victory of Orascom Telecom, locked in
a lengthy battle with the former French monopoly for control of Egypt’s
largest mobile company. The ownership and strategy of France Telecom,
the largest mobile operator in the Middle East by subscribers will also
loom in uncertainty because of the decision.
ECMS is controlled via Mobinil by France Telecom and Orascom in which France Telecom owns 71.25%, Orascom 28.75% and Mobinil owns 51%.
The two owners have been at loggerheads for years over a strategy for
the Egyptian operator.

Orascom Loses MobiNil Case To France Telecom

­Orascom Telecom has lost a legal action and been ordered to sell its entire stake in Egypt's MobiNil to France Telecom. In 2007 Orascom Telecom initiated an arbitration against France Telecom at the Arbitration Court of the International Chamber of Commerce (ICC) to try and force France Telecom to transfer its MobiNil shares to Orascom Telecom.

There have been strained relations between Orascom and France Telecom, with the latter initiating the legal action against FT in December 2007 due to disagreement over the strategy for MobiNil. 

The Arbitration Court has rejected Orascom Telecom’s claims and then turned the matter on its head and ordered it to transfer a large stake in MobiNil to France Telecom instead.

France Telecom says that it will be paying approximately €530 million, and will have full control over the leading mobile operator in Egypt. France Telecom will therefore be able to consolidate the entire financial results of ECMS. On the basis of the 2008 results, this represents additional annual revenues of over €360 million and EBITDA of €165 million.

The holding in the company is slightly complex.

The mobile phone network - which trades as MobiNil - is owned by a holding firm, ECMS - which is in turn owned by three parties, 20% directly by Orascom Telecom, 29% via the stock exchange and the remaining 51% is owned by a company, confusingly called MobiNil.

This holding company is in turn 71.25% owned by France Telecom and 28.75% owned by Orascom Telecom. The court ruling applies only to Orascom Telecom's 28.75% in the holding company.

After the order is carried out, France Telecom will end up with sole ownership of the holding company, and hence have a 51% ownership of the mobile network. Orascom Telecom will retain its 20% direct stake in the mobile network, and the stock market float will be unaffected.

The company is the largest operator in the market, and according to figures from the Mobile World database, has a market share of around 48%.