Egypt’s government wants to raise $2 billion by selling its stake in 32 companies by June. But it has only raised $25 million after selling its stake in one company since announcing the privatization program in February—until now.
Egypt’s finance ministry announced the sale of the government’s stake in Telecom Egypt in a press statement on Sunday, almost two months after it first said it planned to reduce the government’s ownership in the company. Egypt is desperate to raise revenue from privatising state-owned firms in order to meet a series of foreign debt obligations that will be due in a few months.
Reducing the government’s involvement in the economy is part of a $3 billion, 46-month financial support package signed in December, under which Egypt promised the International Monetary Fund it would roll back its involvement in the economy and allow private companies to play a much greater role. Selling 9.5% of Telecom Egypt is the second sale since prime minister Mostafa Madbouly promised on April 29 to press ahead with a planned sale of government stakes in 32 companies in the hope of raising $2 billion by the end of June.
Until this recent sale, the government held 80% of the Egyptian Stock Exchange-listed company, with the rest in free float. According to filings at the Egyptian Stock Exchange reported by Bloomberg, the government sold 162 million shares in the telecommunications company priced at 23.11 Egyptian pounds each. It is also offering 0.5% of Telecom Egypt to employees to buy by May 25, which will bring the total asset sale to 10% which is the equivalent of 12.5% of the stake held by the Ministry of Finance. Overall, it will reduce the government’s stake to 70%.
Earlier in March, Bloomberg reported that Egypt was weighing two offers from the Qatar Investment Authority and Saudi Arabia’s Public Investment Fund for part of Telecom Egypt’s stake in Vodafone Egypt. Telecom Egypt owns 45% of Vodafone Egypt, the largest mobile network operator in Egypt by active subscribers, with a 42% market share in the mobile carrier space. Vodacom Group, the South African subsidiary of London-listed Vodafone owns 55% of the company.