Sunday, Feb 12, 2012

--OTMT says in advanced talks with France Telecom over Egypt's Mobinil

--Joint OTMT, France Telecom statement due before trading starts Monday

(Recasts, adds analyst comment, details throughout.)

By Shereen El Gazzar

Of ZAWYA DOW JONES

DUBAI (Zawya Dow Jones)--Egypt's Orascom Telecom Media and Technology, or OTMT, said Sunday it is in advanced talks with France Telecom (FTE) regarding the future of their jointly-owned Mobinil unit.

OTMT, in a brief statement sent to the Egyptian Stock Exchange, said it will update the market further before trading starts Monday. Its shares, along with Mobinil stock, were suspended in Cairo Sunday pending clarification on Mobinil's situation.

As it stands, France Telecom owns 36.4% of ECMS, the Cairo-listed company commonly referred to as Mobinil, while OTMT controls 34.6% of the company. Egyptian billionaire Naguib Sawiris owns 51.7% of OTMT through his Wind Telecom vehicle.

"The timing of the talks is a surprise given that OTMT/Sawiris's [Mobinil's biggest shareholder] put option over Mobinil shares becomes exercisable for the first time between Sept.15 and Nov.15 2012 at a strike price of EGP239.6 to EGP240.9 per share," said Ahmed Adel, a telecoms analyst at Cairo-based Naeem Brokerage. "If OTMT was intent on exercising the put, why not just wait until then."

Adel said that what could however bring the two parties to make a potential sale now could be a loop-hole in the Orascom Telecom Holding and OTMT demerger process that could trigger France Telecom's call option, or Sawiris could be looking to do a side deal with France Telecom, as he might be seeking to build a new telecoms portfolio under OTMT, he added.

Sawiris couldn't be reached for comment Sunday.

Mobinil shares rallied 10% Thursday on speculation regarding its ownership structure. On top of this, analysts at Goldman Sachs upgraded the shares to buy, from neutral rating, citing a significant possibility that OTMT will exercise a put option on Mobinil on Sept. 15, which would lead to a mandatory offer for all Mobinil minorities.

-By Shereen El Gazzar, Dow Jones Newswires; +971 444 61684; Shereen.elgazzar@dowjones.com

Copyright (c) 2012 Dow Jones & Co.

(END) Dow Jones Newswires

12-02-12 1205GMT