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Vodafone may expand in Egypt and Myanmar

Operator reported to want to buy out Telekom Egypt from their JV, and to partner with Myanmar's state telco

By CAROLINE GABRIEL

Published: 28 October, 2013

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Vodafone has not yet received the windfall from the sale of its stake in Verizon Wireless, but it is still pursuing its twin strategies of expanding in wireline markets in Europe, and in emerging economies. In both cases, it is looking at new acquisitions, and at gaining majority control in carriers where it has only a minority stake, as in India - or offloading those minor holdings, as in the US.

Its latest move is likely to be to buy full ownership of Vodafone Egypt, which would involve paying a potential $2bn to Telecom Egypt for its 45% stake. Telecom Egypt is 80% owned by the state and an exit from the Vodafone joint venture could avoid a conflict of interest, since the state telco - which is the fixed line monopoly - has also applied for an integrated licence, so that it could offer fixed and mobile services under one brand (although the operator has said it is not obliged to sell its Vodafone stake in order to gain the new concession).


Integrated licences are the way that Egypt hopes to increase competition because they will allow the three cellcos - Vodafone, Etisalat and Orange - to offer fixed and quad play services too.

While Vodafone would get the full control it seeks in most markets, its partner would gain welcome funds to pay for its integrated licence, but the cash might also fund the purchase of its own 4G spectrum and network in future, making it a direct rival to Vodafone. Of course, it could also provide a quad play via an MVNO deal with one of the three cellcos - the regulator has already said that it would grant Telecom Egypt an MVNO licence so that it could offer mobile services under its own name.

According to GSMA Wireless Intelligence, Vodafone is the largest operator in Egypt with 41.9m subscribers as of the the end of the third quarter, followed by Orange (34.2m) and Etisalat (25.3m).

Vodafone's emerging economies expansion could also reach into the just-opening market of Myanmar, where it could seek a joint venture with state-owned MPT (Myanmar Posts and Telecom). Vodafone, as well as SingTel and Orange, have reportedly been invited to submit a JV proposal, giving them a second chance to enter this country. They lost out to Telenor of Norway and Ooredoo of Qatar in the recent auction of two national telecoms licences.

In that process, Orange was named the runner-up while SingTel was left out. Vodafone had planned to bid in a joint venture with China Mobile, but the pair withdrew their offer before the winners were announced. There may be further interest in the MPT partnership - the telco's managing director U Aung Maw said recently that his firm was in talks with operators in Singapore, "some western countries", and Japan.

Although Vodafone's strategy is to gain control of its subsidiaries, sometimes it will have to consider minority stakes as an entry point to a new market, where governments are keeping majority ownership for their own telcos.

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