Last week's acquisition of MENA cable by a Telecom Egypt (TE) subsidiary Egyptian International Submarine Cables Company (EISCC) is a key step in the company's strategy according CEO and Managing Director Ahmed El Beheiry.
The telco has confirmed the conclusion of a sales and purchase agreement with Orascom Telecom Media and Technology Holding S.A.E (OTMT) for the purchase of OTMT's shareholding in Middle East and North Africa Submarine Cable ("MENA Cable") for US$ 90 million by TE's 50%-owned subsidiary, EISCC.
El Beheiry said, "As earlier communicated, the decision to acquire MENA Cable is one of the most important steps towards implementing the company's strategic plan to ensure the sustainability of submarine cable revenues and reinforce the contribution of the USD revenue stream. The new cable will add to Telecom Egypt's network of submarine cables fortifying TE's network offering to the maximum number of routes between India and Europe as well as add a new gateway to Europe through Italy."
TE has also revealed that the transaction remains subject to conditions that must be fulfilled within two months.
The company's board of directors confirmed approval of EISCC's plans to acquire MENA Cable almost two weeks ago.
According to information supplied by the company, EISCC's financial advisors for the deal included KPMG and First Capital Financial Advisory, while Al Tamimi & Co and ALC Law Office served as legal advisors and Metel ICT the technical advisor.
"The decision to acquire MENA Cable comes in line with Telecom Egypt's strategy to: achieve a short-term return from this investment (and) preserve the revenue stream of the submarine cable systems," added TE in its statement.
US$200m financing deal
MENA Cable is licensed in Egypt and Italy to operate a submarine telecommunications system connecting Europe to the Middle East and Southeast Asia. The cable system stretches 9, 030 km of which 930km is terrestrial fibre crossing Egypt and consists of six fibre pairs, each pair expandable to 8TB/s with a total capacity of 48TB/s.
TE reduced the dividend for FY 2017 to EGP 0.25 from the EGP 1 per share in order to finance the purchase of MENA Cable.
It emerged yesterday that Telecom Egypt signed the US$200 million financing deal with African Export-Import Bank with Abu Dhabi Islamic Bank as the financial advisor on the agreement which was first announced last week.
"Telecom Egypt's board of directors had approved the short-term renewable financing facility from the African Bank for Import and Export (Afreximbank), managed by Abu Dhabi Islamic Bank, for a maximum of US$200 million. This deal will provide the necessary liquidity to finance our working capital requirements and provide the necessary funding for investment at the lowest possible cost," El Beheiry continued,
Dr George Elombi, Afreximbank's EVP for Governance, Legal and Corporate Services believes the short-term loan facility will help to supply infrastructure need beyond Egypt.
"This (US$200 million) transaction has a direct impact on the development of the regional infrastructural network that serves as a lifeline for many African countries. Such cooperation will make significant contributions towards unlocking the full potentials of telecommunications in Africa and delivering the much-needed developmental impact on the continent."