Telecom Egypt in acquisition talks

State-run Telecom Egypt is in talks to acquire a telecom operator in the Middle East, Africa, or eastern Europe to capture growth outside its home market, its chairman said on Thursday.

"Our preference is to buy an existing operation rather than greenfield," Akil Beshir said in a telephone interview. "We are in preliminary talks with one."

He said he hoped to conclude a deal by the end of the year, but declined to name the target company or country.

"We are focusing on the Middle East and North Africa region and to a lesser extent looking at Africa and eastern Europe," he said, adding the company would seek to buy an operator that combined fixed-line and mobile services.

The company's net profit in 2007 climbed 4.4 per cent to EGP2.534 billion (Dh1.7bn), driven by growth in Internet and data services and sales of services to other operators.

"The trend is that we will be able to make a higher rate of growth in the bottom line versus 2007," Beshir said.

Revenue in 2008 would likely grow by two to three per cent, he added, down from five per cent in 2007.

Telecom Egypt, which said it had 11.23 million fixed-line subscribers by the end of 2007, will lose its fixed-line monopoly when Egypt auctions a second licence in June.

"The fixed-line market in Egypt is almost saturated and there is another operator coming," said Walaa Hazem, telecom analyst at HC Securities in Cairo. "Making an acquisition is a new chance for growth and they have the money to finance it."

The company had about EGP1.3bn of available cash and could raise up to EGP16bn through debt, he said.

Telecom Egypt jointly owns Algerian fixed-line operator Lacom, the country's first private fixed-line provider. Telecom Egypt had resolved differences with Algeria's government, which it had accused of preferential treatment toward the state-owned operator, and may invest more in Algeria, Beshir said.

"We want to benefit from growth in other markets," he said. (Reuters)