Authorities sell 9.5% of Telecom Egypt

The Egyptian finance ministry has announced the sale of a 9.5 percent stake in state-controlled Telecom Egypt for 3.75 billion Egyptian pounds ($122.4 million) as part of the government’s privatization program. The ministry confirmed that 162.2 million shares were sold at a price of 23.11 Egyptian pounds ($0.75) per share. The subscription was oversubscribed 3.11 times. An additional 0.5 percent of shares will be offered to Telecom Egypt employees until May 25. The sale will reduce the government’s stake in Telecom Egypt from 80 percent to 70 percent, with the remaining 20 percent being floated on the Egyptian Exchange. Local investment banks CI Capital and Ahly Pharos managed the sale.

The announcement did not specify the portion of shares sold to local buyers versus non-Egyptians. Egypt has been actively seeking to raise foreign currency through asset sales. Moon Capital, a New York City-based company, was reported to be among the bidders, according to Al Mal newspaper. In February, Prime Minister Mostafa Madbouly disclosed a list of over 30 state-owned companies slated for sale to investors within the year, including the National Company for Producing and Bottling Water (Safi) and Wataniya Petroleum Company.

The Egyptian government aims to press ahead with the privatization program, intending to sell assets worth $2 billion by the end of June. The sale of Telecom Egypt marks the second instance of state asset sales since the commitment was made. The move comes as Egypt faces urgent needs for privatisation proceeds to meet upcoming foreign debt obligations. The announcement aligns with Egypt’s commitment to the International Monetary Fund (IMF) to reduce the state’s involvement in the economy and facilitate a greater role for private companies. Egypt signed a $3 billion financial support package with the IMF in December, granting the government access to immediate funds to bolster the nation’s balance of payments and budget.

The IMF’s conditions, including the slowdown of public investments and privatization of state assets, were imposed due to Egypt’s substantial spending on large-scale construction projects and military purchases, leading to a quadrupling of external debt in the past decade. Egypt’s economy has been severely impacted by the coronavirus pandemic and the Ukraine war, resulting in higher oil and food prices. The Egyptian pound has weakened by more than 13 percent to a new low of over 32 against the US dollar in January 2023 compared to March 2022. With approximately one-third of Egypt’s population living in poverty, the government relies on state subsidies and similar schemes to ensure affordability of essential goods for many Egyptians.