Vodafone Egypt deal delay beneficial: Expert

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Updated 14 July 2020

Vodafone Egypt deal delay beneficial: Expert

  • The delay of the agreement gives STC time to consider the variables that have arisen due to the COVID-19 pandemic

RIYADH: The Saudi Telecom Company (STC) has said it will need two additional months to close an acquisition deal to buy a 55 percent stake in Vodafone Egypt.

According to a logistics expert, Zael Aldayhani, the delay gives STC time to consider the variables that have arisen due to the COVID-19 pandemic and the changes brought on by the global health crisis.

STC concluded a deal in January to buy the stake for $2.4 billion, then decided in April to extend the process for 90 days due to logistical challenges stemming from the spread of COVID-19.

STC said it would extend the period again — to September — for the same reason. Vodafone Egypt is the largest mobile operator in Egypt with over 44 million subscribers and a 40 percent market share. The Kingdom’s Public Investment Fund owns a majority stake in STC.

Aldayhani said the Saudi-Egyptian deal was encountering difficult times and challenges, significantly the inability of the team to travel and move around.

“Movement and travel is difficult in both countries in the light of the COVID-19 pandemic,” he told Arab News. “Another challenge is the absence of accurate investment forecasts for the sector.”

There are numerous aspects of the deal that should be addressed, a matter that was hard for the time being, and it was natural to extend the period in the present conditions and circumstances. However, this postponement did not mean that the deal had been canceled. Assessment was essential in order to determine the fair price of the shares available for acquisition, he added.

Aldayhani believed that the extension would be beneficial for STC because the company would be able to carefully study the variables that had taken place before and after the pandemic for a more accurate picture.

Turkey on brink of recession as economy collapses

Updated 13 August 2020

Turkey on brink of recession as economy collapses

  • Consumer debt has increased by 25 percent to more than $100 billion in the past three months

JEDDAH: President Recep Tayyip Erdogan’s popularity is plunging in lockstep with Turkey’s collapsing economy and the country is on the verge of a potentially devastating recession, financial experts have told Arab News.
The value of the Turkish lira has fallen to 7.30 against the US dollar and the central bank has spent $65 billion to prop up the currency, according to the US investment bank Goldman Sachs.
Consumer debt has increased by 25 percent to more than $100 billion in the past three months as the government moved to help families during the coronavirus pandemic, but the result has been a surge in inflation to 12 percent.
With the falling lira and increased price of imported goods, the living standards of many Turks who earn in lira but have dollar debts have fallen sharply.
The economy is expected to shrink by about 4 percent this year. The official unemployment rate remains at 12.8 percent because layoffs are banned, although many experts say the real figures are far higher.
To complete the perfect storm, tourism revenues and exports have been decimated by the pandemic, and foreign capital has fled amid fears over economic trends and the independence of the central bank.
Wolfango Piccoli, of Teneo Intelligence in London, said logic dictated an increase in interest rates but “this is unlikely to happen.”
Piccoli said central bank officials would strive to avoid an outright rate hike at their monetary policy meeting on Aug. 20. “A mix of controlled devaluation and backdoor policies, such as limiting Turkish lira’s liquidity, remains their preferred approach,” he said.
There is speculation of snap elections, and Erdogan’s view is that higher interest rates cause inflation, despite considerable economic evidence to the contrary.