Telecom Egypt Jumps on Vodafone Stake Sale Bets: Cairo Mover

Telecom Egypt Co., the country’s landline phone monopoly, climbed the most in more than five months on bets the sale of its stake in Vodafone Plc. (VOD)’s local unit could lead to higher dividend payments.

The shares gained 4 percent, the most since July 9, to 14.43 Egyptian pounds at the close in Cairo. The benchmark EGX 30 Index rose 1.4 percent, the highest since January 2011.

Saudi Telecom Co. (STC) is mulling the acquisition of Telecom Egypt’s 45 percent stake in the Vodafone unit, Alrai Kuwaiti newspaper reported. The sale could ease a conflict of interest for the Egyptian phone provider after it applied for an integrated license to offer mobile services. The company, 80 percent owned by the government, said it has no intention of selling the stake, according to a statement to the bourse after the market closed.

“The importance of such an offer is that a lot of dividends might be distributed if the Vodafone stake was sold,” said Ahmed Hindawy, team head of research at Prime Holding in Cairo. “Investors believe that any acquisition of Vodafone will generate cash flow to Telecom Egypt of at least 12.5 billion pounds ($1.8 billion).”

Minister of Telecommunications Atef Helmy said earlier this year that the link between Telecom Egypt and Vodafone “can’t continue”, and that the government will study possible scenarios at the appropriate time. Vodafone is interested in buying the remaining stake in its unit though no offer has been made, a company official said in October.

Telecom Egypt shares have gained 2 percent this year, compared with an almost 26 percent advance in the benchmark. The 12-month yield on the company’s dividend is 8.97 percent and it last paid investors 1.3O pound per share on April 22, according to data compiled by Bloomberg.

To contact the reporter on this story: Tamim Elyan in Cairo at telyan@bloomberg.net

To contact the editor responsible for this story: Tarek El-Tablawy at teltablawy@bloomberg.net

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