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.


Saudi Arabia looks to cut spending in bid to shrink deficit

Updated 29 min 15 sec ago

Saudi Arabia looks to cut spending in bid to shrink deficit

  • Saudi Arabia has issued about SR84 billion in sukuk in the year to date

LONDON: Saudi Arabia plans to reduce spending next year by about 7.5 percent to SR990 billion ($263.9 billion) as it seeks to reduce its deficit. This compares to spending of SR1.07 trillion this year, it said in a preliminary budget statement.

The Kingdom anticipates a budget deficit of about 12 percent this year falling to 5.1 percent next year.

Saudi Arabia released data on Wednesday showing that the economy contracted by about 7 percent in the second quarter as regional economies faced the twin blow of the coronavirus pandemic and continued oil price weakness.

The unemployment rate among Saudis increased to 15.4 percent in the second quarter compared with 11.8 percent in the first quarter of the year.

The challenging headwinds facing regional economies is expected to spur activity across debt markets as countries sell bonds to help fund spending.

Saudi Arabia has already issued about SR84 billion in sukuk in the year to date.

“Over the past three years, the government has developed (from scratch) a well-functioning and increasingly deeper domestic sukuk market that has allowed it to tap into growing domestic and international demand for Shariah-compliant fixed income assets,” Moody’s said in a statement on Wednesday. 

“This, in turn, has helped diversify its funding sources compared with what was available during the oil price shock of 2015-16 and ease liquidity pressures amid a more than doubling of government financing needs this year,” the ratings agency added.