Orascom Telecom wants capital increase

Orascom Telecom, Egypt and the Middle East’s largest telecommunications company in terms of subscribers, asked on Monday for its shareholders to approve an almost double capital increase to 14 billion Egyptian pounds ($2.4 billion) in order to split the company into two separate entities.

In a statement published by the Egyptian Stock Market, the company said it would hold a meeting on April 13 to approve the capital boost and the stock spin-off.

It comes after shareholders of Russia’s VimpelCom approved a $6 billion deal to acquire the telecom assets of Egyptian billionaire Naguib Sawiris. The deal with the telecom mogul would see the securing of more than 50 percent stake in Orascom Telecom and Italy’s Wind Telecommunicazioni SpA.

However, a condition of the deal is the approval by at least 75 percent of Orascom’s shareholders for the spin-off to occur and certain assets to its present owners. The assets of OT include a 35 percent stake in the nation’s top mobile carrier Mobinil and its 95 percent stake in North Korea’s Koryolink.

As a result of the announcement, the telecom company’s shares closed down 0.9 percent on Monday after two days of positive trading.

By Desmond Shephard