Orascom sells out of Hutchison Telecom

Egyptian carrier Orascom Telecom said Thursday it has reached an agreement to sell its remaining shares in Hutchison Whampoa’s emerging markets unit.

Orascom will sell its 14.2 per cent holding in Hutchison Telecommunications International Ltd (HTIL) for around HK$7.5bn ($960m).

Hong Kong conglomerate Hutchison Whampoa will re-acquire 9.2 per cent of the stake and a company called Yuda, owned by Hutchison head honcho, Li Ka-shing, will take the remaining 4 per cent.

Orascom acquired a 19.3 per cent interest in HTIL from Hutchison in 2005 for a total of $1.3bn. The Egyptian carrier sold 5 per cent of the holding for $327m earlier this year.

So Orascom only made a total of $1.287bn on the resale of the full stake but it also received a special cash dividend of $793m from the proceeds of HTIL’s sale of its Indian subsidiary, Hutch Essar, to Vodafone earlier this year.

This gives Orascom a tidy profit of around $780m from the transaction.

Naguib Sawiris, chairman and CEO of Orascom the company’s initial acquisition of HTIL shares, “was to gain exposure to the Indian market, however, after the sale of the Indian asset [Essar], the investment in HTIL became of less strategic value.”

Orascom had been one of the original runners in the bidding for Hutch Essar but it was Vodafone that eventually came out on top with a bid of $11.7bn.

“With the proceeds of the sale, OTH will evaluate investment opportunities including acquisitions of new licenses and established operators of substantial size, as well as evaluating opportunistic repurchases of its GDRs in light of favorable relative market valuations,” said Sawiris.