Vodafone deal to accelerate stc revenue growth Aljazira Capital

Riyadh – Acquiring Vodafone Egypt would help Saudi Telecom Company (stc) in expanding its footprint in the MENA region, since Egypt is a major and fast-growing market, according to a recent report by Aljazira Capital.

The research firm said that the deal would provide stc with opportunities to accelerate its revenue growth, since Vodafone Egypt is the largest mobile network operator in Egypt with a subscriber base of 39.9 million as of last September, representing a 43% market share.

Although average revenue per user (ARPU) for mobile operators in the North African country is typically low due to lower disposable income and a high number of prepaid subscribers, however, Vodafone Egypt had a higher proportion of postpaid subscribers.

Around 90% of Vodafone Egypt subscribers use the prepaid service, while 10% use postpaid subscriptions, in comparison with other telecom companies with an average of 5-6%, which allowed the company to achieve higher ARPU compared to its peers, the report noted.

Vodafone Egypt achieved a monthly blended ARPU of EGP 44.8 during the third quarter (Q3) of 2019, compared with EGP 27.1 for Orange, and EGP 27 for Etisalat, its two main competitors, alongside Telecom Egypt (WE), data from Fitch Solutions shows.

stc recently signed a non-binding memorandum of understanding (MoU) with Vodafone to acquire its 55% stake in Vodafone Egypt for $2.392 billion, equivalent to around EGP 37.8 billion (SAR 8.97 billion), valuing Vodafone’s Egyptian unit at about $4.35 billion (SAR 16.31 billion).