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Orascom Telecom Seeks Control of Canada Unit After Law Change

Orascom Telecom Holding SAE will seek shareholder approval to gain control of Canada’s Globalive Investment Holding Corp., taking advantage of a change in the country’s foreign ownership laws this year.

Cairo-based Orascom will seek to exercise an option to convert its shares with no voting rights in Globalive to common shares, which will increase those rights to 65.1 percent from 32 percent, it said in a filing to the Egyptian bourse today. The company also plans to restructure a loan to Globalive Wireless Management and forgive returns on it totalling 450 million Canadian dollars ($453 million).

Canada’s government eased foreign-ownership restrictions in the telecommunications industry in March, allowing foreign investors to own up to 100 percent of operators with less than 10 percent market share by revenue. Orascom, which said it is taking advantage of the change, completed a merger last year with Russia’s VimpelCom Ltd. that created the world’s sixth-biggest mobile phone company.

“It makes sense that OT wants to match its economic ownership with voting rights,” Amr El-Alfy, deputy director of research at Cairo-based Commercial International Brokerage Co., said by phone today. “It’s positive because it gives the company more options in terms of making strategic changes.”

The approval of Canadian regulators is expected by year-end or early 2013, Orascom said. The company held its shareholder meeting in November, seeking approval for a mutual service agreement with VimpelCom to cut costs and change its name to Global Telecom Holding, it said.

Shares of Orascom fell 0.5 percent to 3.72 Egyptian pounds at 12:09 p.m. in Cairo, valuing the company at 19.5 billion pounds ($3.2 billion). The stock has surged 115 percent this year, compared with a 59-percent gain for the benchmark EGX 30 Index.

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