France Telecom said on Tuesday it will will pay its Egyptian partner Orascom Telecom Media & Technology (OTMT) $142.30 million for taking over a management services contract of their mobile phone venture Mobinil.
Egypt plays a key part in France Telecom’s efforts to expand in high-growth emerging markets such as Africa and the Middle East. The Paris-based telecoms giant gained a 94% stake after purchasing most of OTMT’s stake in Mobinil this year for $3.11 billion.
Some analysts are surprised by the payment announcement made by France Telecom as they expected OTMT to simply lose the service contract fees because of its reduced ownership of Mobinil.
EFG Hermes investment bank said in a research note that it has increased its valuation of OTMT by 26% to 0.80 Egyptian pounds ($0.13) per share as a result of the France Telecom payment.
Orascom has been left with about 5% of Mobinil, which vies with a Vodafone joint venture for dominance of Egypt’s mobile market. One trader said that the shares were driven higher by retail investors speculating that OTMT could soon sell its remaining Mobinil shares or issue a dividend out of France Telecom’s payment.