France Telecom and Orascom Telcom Holdings have ended their legal dispute over Egyptian operator, Mobinil.
Both parties, who jointly share control of Mobinil, have agreed to pursue a new shareholder agreement that would end the two year long dispute, according to BusinessWeek.com.
France Telecom agreed to change its accounting methods to fully consolidate Mobinil under the agreement, while Orascom will consolidate its participation in Mobinil through “equity method.”
According to the new agreement, the company structure will not undergo any changes, raising questions about France Telecom’s intent to acquire minority shareholders in Mobinil.
Recently, France Telecom Chief Executive Officer, Stephane Richard, announced ambitious plans to double revenue in emerging markets within the next five years, spending as much as $9,6 billion on deals in Africa and the Middle East.
According to Cairo-based investment bank CI Capital, “Orascom Telecom has managed to keep its ownership in Mobinil intact and strengthen its stronghold”.
Khaled Bichara, Chief Executive Officer of Orascom, said the agreement was received well by both parties.
France Telecom and Orascom were locked in a complicated legal battle over control of ECMS, referred to commonly by its brand name Mobinil. Under the current structure, ECMS is 51% owned by a holding company that is 71.25% controlled by France Telecom’s unit, Orange Participations, and 28.75% by Orascom Telecom. Orascom also controls a direct 20% stake in ECMS.
France Telecom had opened a bid for the outstanding shares in ECMS, an offer that was taken to court by Orascom, who claimed the selling price was lower than the price set in the previous arbitration.
Orascom, headed by Egyptian billionaire Naguib Sawiris, and France Telecom, have been disputing Mobinil’s ownership since 2007.
