Crowds cheered at a court hearing in Cairo on Wednesday as judges halted France Telecom’s bid to take control of Egypt’s biggest mobile firm Mobinil, prolonging a struggle over the latter’s ownership.
Egypt’s Orascom Telecom had appealed to the court against a decision by the regulator in December to allow France Telecom to go ahead with its share offer, which could cost the French firm $2.9 billion if all shareholders agree to sell.
Emotions ran high when the verdict was announced, with crowds of people including Orascom executives cheering and applauding the Egyptian company’s victory.
“The court rules … to stop the implementation of the authority’s decision,” Judge Hamdy Yassin said in court.
Speaking to reporters after the hearing, Orascom Executive Chairman Naguib Sawiris said: “We are in our country, staying in it. We are not leaving.”
France Telecom said in a statement that it regretted the decision and would seek to have the tender offer reinstated. It also said the next hearing would be on February 13.
The fight between France Telecom and Orascom is for control of Egyptian Company for Mobile Services (ECMS), which markets its offers under the brand name Mobinil.
In December, the Egypt’s stock market regulator, the Egyptian Financial Supervisory Authority (EFSA), decided to allow France Telecom to buy out shares Orascom’s shares in ECMS, as well as other minority shareholders in a tender offer that was supposed to close tomorrow.
EFSA said in a statement on Wednesday that the decision halts the tender offer, which would have allowed France Telecom to buy ECMS shares at 245 Egyptian pounds each.
The French group owns about 36.4 percent of ECMS, Egypt’s biggest mobile operator by subscriber numbers, while Orascom owns about 34.6 percent.
Mike Millar, regional director of research of Naeem Holding, said the ruling could result in lengthy legal proceedings.
“The tender is cancelled, the shares will be returned and we’re back to ground zero,” said Nemat Choucri, a telecoms analyst with brokerage HC Securities.
Orascom had previously tried to have the tender offer stopped but EFSA’s arbitration committee rejected its request.
“The ruling proves that the decision of the (regulatory) authority was incorrect. Our position is correct. The next step is from the regulator, not from us. We had no desire to sell in the first place,” Sawiris said.
Orascom said France Telecom should have offered 273 pounds a share, equivalent to a price set by a court in April for shares held indirectly by Orascom through a holding company, Mobinil Telecommunications, which owns 51 percent of the mobile firm.
Analysts said the next move may indeed be an offer by France Telecom to increase the price it is willing to pay for the ECMS shares.
“It depends now on whether France Telecom is prepared to submit a higher offer, at 273 pounds. So far we haven’t heard anything from them,” HC’s Choucri said.
CI Capital telecoms analyst Amr Elalfy said: “Basically it is negative for (the share price of) Mobinil in the short term … Sooner or later (Orascom Telecom and France Telecom) have to reach agreement.”
ECMS shares closed down 3.7 percent at 229 pounds, the biggest percentage drop since May 5.