In a significant stride towards its economic reform agenda, the Egyptian government on Sunday successfully sold a 9.5 percent stake in state-run Telecom Egypt.
Valued at 3.7 billion Egyptian pounds (approximately $121 million), this strategic move aims to invigorate the biggest North African economy and attract much-needed investment, Reuters reported.
Executed through the Egyptian Stock Exchange, the deal involved the sale of 162.2 million shares, each priced at 23.11 Egyptian pounds, as stated in the company’s bourse filing. This transaction represents the first tangible step in Cairo’s comprehensive program to improve the country’s ailing economy by divesting state assets.
As part of the stake sale, the government also extended an offer to Telecom Egypt employees, granting them the opportunity to acquire an additional 0.5 percent stake in the company.
Egypt’s Transformation Script and the Gulf Connection
The Egyptian government’s overarching economic reform agenda includes the partial sale of shareholdings through initial public offerings or private placements in 32 companies.
Among these state-linked enterprises are undisclosed entities operated by the Egyptian military, with only Wattaneya and Safi currently named.
Egypt’s economy has endured significant challenges stemming from the COVID-19 pandemic and the ongoing conflict in Ukraine.
The national currency has depreciated by over half its value after three rounds of devaluations since March 2022. To secure financial assistance from the International Monetary Fund, the Egyptian government has committed to reducing its role in the economy and limiting the expanding presence of military companies.
Egypt has pledged to increase the private sector’s contribution to the economy from 30 percent to 65 percent by 2025. An IMF report cited released in January indicated that $8.6 billion in state assets would be sold by the end of this year, further emphasising the government’s commitment to economic reform.
Prime Minister Mostafa Madbouly recently reaffirmed the plan to list state companies, announcing that ten more military-run firms would be added to those already set for public offerings. However, despite repeated assurances from the government, there has been limited progress in listing these companies on the stock exchange.
Gulf countries have emerged as Egypt’s primary investors and active buyers of state assets. They are expected to benefit greatly from the government’s ongoing efforts to sell stakes in various entities.
Last year, Egypt witnessed a surge in mergers and acquisitions, with 66 deals completed —more than double the previous year’s number. Companies from the United Arab Emirates and Saudi Arabia acquired stakes in 40 of these transactions.
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