Qatar secures first government-shares acquisition in Egypt

Egypt has agreed to sell 25 percent of the state-owned shares in Vodafone Egypt to Qatari buyers, according to a source familiar with the negotiations, who said an agreement on the sale took place in Cairo last week during the visit of a Qatari Businessmen Association delegation.

The sale agreement was approved by the major stakeholder of the company, Vodafone Group, said the source, and is now pending final approval by Egypt’s National Telecom Regulatory Authority.

Qatar’s initial offer to purchase all government-held shares in the company was rejected by the Egyptian side. State-owned Telecom Egypt owns about 45 percent of Vodafone Egypt, whose profits netted the company over LE1 billion during the first 6 months of 2022.

The agreement’s conclusion comes on the heels of a historic shift in Egyptian-Qatari relations over the past months, with Qatar’s Emir Tamim bin Hamad visiting Cairo in June for the first time since the suspension of diplomatic ties in 2017, and President Abdel Fattah al-Sisi visiting Doha in September for the first time since he came to power in 2014.

The rapprochement is materializing amid relative tension between Egypt and the United Arab Emirates due to what political, diplomatic and security sources described to Egypt as a growing sense of resentment in Cairo about the concessions it has been forced to make with the UAE in order to secure vital economic support.

Opening the door to Qatari investment is a growing desire in Cairo, according to sources who spoke to Mada Masr both before and after Sisi's visit to Doha and who also noted the desire to establish bilateral cooperation in areas of mutual foreign policy interest, countering Emirati influence.

Sisi’s September visit yielded an understanding around a number of outstanding questions, including Qatari economic support for Egypt and acquisitions of government stakes in a number of Egyptian companies. 

These include major companies such as Eastern Tobacco and Alexandria Container and Cargo Handling, according to the first source, in which Saudi Arabia and the UAE have previously acquired some shares as well.

With a pressing need to raise foreign currency liquidity, Egyptian officials are hoping to attract more than US$15 billion in investments from their Qatari counterpart before the end of the year, a government official told Mada Masr in September.

Among the issues in the way of agreement, another source with direct knowledge of the negotiations told Mada Masr three weeks ago, were differences regarding the amount of shares that Qatar would obtain in the companies.

While Qatar first proposed to purchase all the remaining government stakes in Eastern Tobacco, representing over 50 percent of the company, Egypt was unwilling to sell more than 20–25 percent of its shares, according to a consultant involved in the negotiations who spoke to Mada Masr last month.

A government source in the Suez Canal Economic Zone added that the Qatar Investment Authority also aims to establish a green hydrogen project in the Suez Canal Economic Zone as part of its Egypt portfolio.

Another obstacle was uncertainty around the exchange value of the Egyptian pound, the second source with direct knowledge of the negotiations said. The central bank took steps last month to increase transparency regarding the pound’s valuation following the conclusion of an agreement with the IMF, floating the currency in a decision that saw it drop nearly 15 percent in value over a single afternoon.

Among other steps the government has taken to speed through its program of asset sales to countries in the Gulf is the September establishment of a vehicle to do so under its sovereign wealth fund. 

Qatari acquisition offers are expected to be finalized before the end of this year, according to the first source familiar with the negotiations.