Telecom Egypt acquires 50% of EISCC for $15 mln
Telecom Egypt’s board of directors approved the acquisition of 50 percent of its subsidiary Egyptian Submarine Cable Company (EISCC) for $15 million.
The company clarified in a filing to the Egyptian Exchange (EGX) that this decision is taken as EISCC has multiple financial advantages, including full consolidation of MENA Cable profitability from the Bharti Airtel transaction, immediate savings of $10 million as a result of the new structure, and total recognition of recurring revenue over the life time of the cable (min. of 15 years).
Managing Director and Chief Executive Officer of Telecom Egypt Ahmed el-Beheiry emphasized the importance of this deal as it will enable the full consolidation of the asset and the expected revenue over its lifetime. He added that this transaction marks the second fully owned submarine cable by Telecom Egypt in addition to TE North.
“Management has worked tirelessly since the beginning of the year to secure the revenue of its international submarine cable network and announced to investors that it foresees a short term return on the acquisition of MENA Cable,” Beheiry said.
“We have since reported several milestones in our plan including the conclusion of the acquisition of MENA Cable as well as the signing of an MOU to recover our investment,” he added.
The company announced previously this month that EISCC completed the acquisition of Middle East and North Africa Submarine Cable “Mena Cable” from Orascom Investment Holding “OIH”, with total enterprise value of $90 million of which $40 million represent the equity value of MENA Cable and the remainder represent its outstanding debt.
In August, Telecom Egypt signed with India’s Airtel Company a memorandum of understanding to enhance cooperation in the maritime cable domain.
As per the memo, the Indian company will get IRUs (Indefeasible Right of Use) on Middle East, North Africa Submarine Cable (MENA Cable) and TE North Cable Systems. In addition, Airtel will take large capacities in two new hi-tech Cable Systems (SMW5 & AAE1) on a long-term basis. Beheiry said that his company expects to formalize the partnership with Airtel into an agreement soon, which will enable Telecom Egypt to recover all its investment in MENA Cable.
Airtel’s global network portfolio includes the ownership of i2i submarine cable system connecting Chennai to Singapore, consortium ownership of SMW4 submarine cable system connecting Chennai and Mumbai to Singapore and Europe, and new cable system investments like Asia America Gateway, India Middle East & Western Europe, Unity, EIG and East Africa Submarine System.
On a different note, the company’s consolidated results slipped 18.2 percent during the first half of 2018, recording LE 2.06 billion, compared to LE 2.52 billion during the same period of 2017.
Telecom Egypt operates within the telecommunication services sector focusing on integrated telecommunication services.
It has 17 subsidiaries operating across British Islands, Western Europe, Northern Africa and Middle East. Telecom Egypt is based in 6th of October, Egypt.
Source: Egypt Today