Last checked at 
CAIRO, Feb 5 (Reuters) - Saudi Telecom Co (STC)
must offer to buy the 45% of Vodafone Egypt owned by Telecom
Egypt if it goes ahead with a $2.4 billion purchase of Vodafone
Group's stake in the company, Egypt's financial regulator said.
STC struck a preliminary deal on Jan. 29 to buy Vodafone
Group's 55% stake in Vodafone Egypt. Another 45% is held
by Telecom Egypt, itself owned 80% by the Egyptian
government and 20% as free-floating shares on the stock
exchange.
With 44 million subscribers and a 40% market share, Vodafone
Egypt is the country's biggest mobile operator.
In a letter released on Wednesday by Telecom Egypt, Egypt's
Financial Regulatory Authority (FRA) confirmed the STC offer
would be subject to a 1992 law requiring a mandatory tender for
any outstanding shares.
"Telecom Egypt is closely following the aforementioned
potential transaction to consider all of its possible investment
options and opportunities," Telecom Egypt said in a stock
exchange disclosure on Wednesday.
Telecom Egypt may well be tempted to sell at least part of
its stake, analysts said.
Wael Ziada, a former telecoms analyst and now head of
investment company Zilla Capital, said STC would have little
problem absorbing the extra cost and that Telecom Egypt could
use the extra funds after having launched its own mobile network
in 2017 under the brand "We".
"Setting up a separate mobile network has been very
expensive for Telecom Egypt and sent it from being a cash rich
operator into one with debt of over 15 billion Egyptian pounds
($950 million)," Ziada said. "It may be tempted to have an
injection of cash."
Allen Sandeep, head of research at Naeem Brokerage,
suggested Telecom Egypt might opt to sell at least a portion of
its stake.
"Selling all of its stake could be a good move from a
near-term perspective, retaining part of it might not be a bad
move either," he said. Vodafone Egypt is the most profitable
telecom operator in the country."
($1 = 15.7500 Egyptian pounds)
(Reporting by Patrick Werr; Editing by Mark Potter)
