France Telecom, Orascom Telecom reach agreement on Mobilnil

After a protracted battle that almost forced France Telecom to withdraw from Egypt, the company and Orascom Telecom have reached an agreement on the shareholder structure for the Egyptian Company for Mobile Service, known by its Mobilnil trade name.

The settlement, through the Egyptian government, helps consolidate France Telecom's operations in Africa, which are expected to compensate for sluggish growth in the saturated European markets. Although the shareholding structure of the two companies will not change, the ISP (Internet service provider) Linkdotnet, previously wholly owned by Orascom Telecom, will be merged into Mobilnil.

The settlement of the shareholding structure comes only a few days after an Egyptian higher court upheld a ruling by another court barring France Telecom's outright buyout of Mobilnil. The court said France Telecom's majority stake in the company would disadvantage minority shareholders. But the Egyptian government intervened and stopped France Telecom from pulling out all its business in the country. Ownership of the operators has been a source of tension and legal dispute for several years.

Under the new agreement France Telecom will hold a 71.25 percent stake in Mobilnil, while Orascom Telecom will hold a 28.75 percent share. The amended shareholding agreement will also give Orascom Telecom operational rights commensurate with its co-owner and strategic partner position, in addition to protection and liquidity rights.

While France Telecom is owned by the French government, Orascom Telecom is owned by Egyptian entrepreneur Naguib Sawiris, who has operations in Ivory, Zimbabwe, Congo Brazzaville, Central African Republic and Togo.  

France Telecom is expanding its presence in Africa through acquisitions and partnerships with incumbent operators. Last month it took over the management of the Ethiopian Telecommunication Company, with plans under way for more investment in Africa in addition to the company's operations in Madagascar, Mali, Ivory Coast, Senegal and Cameroon. France Telecom is using the Egyptian market as a stepping stone for further investment in Arab nations including Algeria, where the government is planning to sell its incumbent operator.