Vodafone Squeezed in Egypt as State-Backed Partner Turns Rival

Vodafone Group Plc is getting squeezed in Egypt as its state-backed partner embarks on a solo push into wireless services -- crowding the market with a fourth provider while potentially leaving its U.K.-based ally to fend for itself.
To finance its own network, Telecom Egypt may sell its 45 percent stake in an existing venture with Vodafone, according to two analysts who have been briefed by the company. The options range from an initial public offering of the stake, transferring it elsewhere in the government or finding a private buyer.
Whatever the outcome, Vodafone’s position won’t be the same. The venture, Vodafone Egypt, is now the country’s biggest wireless provider with a 41 percent market share. Telecom Egypt, which won its own 4G licenses this month, will be a fourth competitor working with the latest technology. In the best-case result Vodafone Egypt will find a new government partner or IPO the stake. A private buyer would want control, so Vodafone might have to decide whether to buy the stake or sell out and exit the country.
"Vodafone likes having Telecom Egypt as a partner because it gives them a tie to the government,” said James Ratzer, an analyst at New Street Research LLP. “They are likely to want to recreate this situation” with a new partner, he said.
Vodafone Group’s spokesman Ben Padovan declined to comment on his company’s plans, as did Telecom Egypt’s Mohamed Kamal.