Regulator demands disclosure of Orascom-FT’s Mobinil settlement

Egypt’s market regulator has given Orascom Telecom one week to provide further information on the settlement agreed with co-owner France Telecom (FT), which ends their long-running dispute concerning joint venture Mobinil. The Egyptian Financial Supervisory Authority wants clarification on how the two firms came to determine FT paying Orascom a US$300 million settlement fee, and the price for Orascom’s put option.

Additionally, the regulator has requested further details on how the transaction will affect management structure, voting rights and how earning will be accounted, while minority shareholders have the same timeframe to express their views on the matter. If Orascom does not respond in time, it could meet sanctions imposed by the regulator.

Orascom and FT have been embroiled in legal action over the ownership of a holding company that owns 51 per cent of the Egyptian Company for Mobile Services (ECMS), which trades as Mobinil, Egypt’s largest mobile operator by subscribers. Orascom has a 20 per cent stake in ECMS. FT had wanted to purchase the remaining ECMS shares at EGP 245 (US$43.70) each, but the block was upheld by an Egyptian court last month.

The put option, to sell ECMS share to FT only, will be valid from September 15 to November 15 in 2012 and 2013 and will increase in value from EGP 221.70 at the signing, to EGP 248.50 pounds at end-2013 for ECMS shares.