Cairo – Mubasher: Renaissance Capital has maintained their 'Hold' rating on Global Telecom Holding at a target price (TP) of EGP 6.2 per share, narrowing down their equity valuation by 18%.
VEON has failed to consolidate Global Telecom for the second time in five years, but consolidation is still “rational” in the long term, according to a recent report by Renaissance Capital.
Amsterdam-based VEON Ltd, Global Telecom’s main shareholder, notified the Egyptian Financial Regulatory Authority (FRA) last Tuesday that it had withdrawn its mandatory offer to buy a 42.3% stake in the telecommunications company.
The Dutch company said it had withdrawn its offer as time passed without getting any approvals.
VEON could maintain minority buyout offers, upon rules allowing it to make an unlimited number of offers to buy up to 10% of outstanding stock, the Russian investment bank said.
This would be a long-lasting process for VEON to eventually achieve the same result of gathering a near-100% stake in the company, as well as squeeze out remaining shareholders.
It is noteworthy that Alfa Group had previously tried to fully consolidate Global Telecom and buy out minorities for $0.7 per share in 2013, but the Egyptian telecom company’s shareholders rejected the offer as the price was lower than the required minimum of 26.6%.
Moscow-based Renaissance Capital has set reasons for consolidation, including “lower costs by closing down the Egyptian office and avoiding exposure to Egyptian country risks; and the ability to manage opcos more effectively and to upstream cash directly”.
