IHS Global Insight Perspective | |
Significance | The announcement is a positive move which will see both major shareholders provide a better service to Mobinil. |
Implications | Further clarification will soon be announced after the ruling against France Telecom to purchase Orascom's existing shares in Mobinil. |
Outlook | Mobinil will enter into the Internet sector through a tie up with Orascom's ISP LINKdotNET. |
The Egyptian operator Orascom Telecom and French incumbent operator France Telecom are coming to an agreement after an Egyptian court blocked France Telecom from purchasing Orascom's remaining shares in Mobinil (see Egypt: 12 April 2010: Egyptian Court Blocks France Telecom's Appeal over Purchase Offer for Mobinil) Reuters reports. A statement was released saying Orascom and France Telecom "will continue their partnership on a renewed basis ... implementing a revised shareholder agreement, but with no change to the existing ownership structure or their shareholders' voting rights". In 2007, Orascom took France Telecom to a Swiss arbitration court which ruled in April 2009 that Orascom should sell its minority stake in their shared holding company that owns 51% of ECMS. The court ruling was not implemented, and the dispute was then carried over to an Egyptian court which prevented FT's third tender offer for the free float shares after regulator approval late last year.
As part of the agreement Mobinil will move into the broadband business by merging with Orascom's ISP LINKdotNET; however, this still needs to be approved by ECMS. France Telecom deputy chief executive officer Jean-Yves Larrouturou said: "The acquisition of LINKdotNET is a very important part, from a business standpoint, of this agreement…It really creates new possibilities for the services we will offer to our customers."
Outlook and Implications
An overall agreement between the two operators is a positive move for the future of Mobinil. The Egyptian mobile operator needs its two major shareholders to work together. Backing by Orascom will enable Mobinil to progress in the increasingly competitive Egyptian market.
Mobinil's entry into the Internet sector through LINKdotNET will give it diversity. It is already providing 3G services in the country and competing with all three operators. As in most emerging markets, mobile ARPU levels are slipping at around 10–15% per year. A tie up with an ISP could help offer more value-added services related to Internet services to help support the falling ARPU levels.