CAIRO: Orascom Telecom (OT) announced Wednesday that France Telecom (FT) had failed to pay in its effort to buyout OT's share in Mobinil. FT disputes claim, throwing into doubt the future of the court ordered transaction. Both sides had claimed foul play by the other in the multi-billion dollar deal, with OT last weekend extending the payment deadline by 72 hours, saying it would give the French telecom company one last window to make the purchase. "FT has not yet responded, said Sherouk Diab, senior telecom analyst at Beltone Financial discussing OT's Wednesday rebuff of FT. "So I wouldn't take OT's opinion as legal and binding. However, at present, it seems that the status quo remains. Diab's statements are reflective of many in the financial sector who see no easy resolution to the latest impasse. The Egyptian telecom giant issued a statement Wednesday claiming FT's failure to make payment. "Orascom Telecom Holding announces that France Telecom has failed to pay the purchase price as required by the terms of the arbitral award, the statement said. "OT has provided FT with documentary evidence from its banks, which confirms that the shares can be transferred free of pledge, the statement continued. FT, however, denied the latest claims. Dow Jones reported from Paris that FT argued it had filed necessary paperwork with Egyptian regulators by Wednesday that would allow the transfer of shares to go forward. "France Telecom once again requests Orascom Telecom to comply with the arbitration award that the International Chamber of Commerce (ICC) has issued against Orascom Telecom following the legal action it launched in 2007, FT said in a statement on Monday. "France Telecom would also like Orascom Telecom to cease its media campaign in order to re-establish a calm environment that is more appropriate for conducting constructive discussions with the Egyptian authorities, it said. FT had not yet released a statement following OT's latest Wednesday pronouncement. The dispute arose in 2007 based on legal actions taken by OT in which it filed paperwork with the ICC, which serves as an international business arbiter. The 2007 action "was a strategic management decision by OT because obviously at the time they thought they could win, said Diab. The court eventually ruled that FT should buy out OT's 51 percent stake in the Mobinil holding company. Conflict soon arose, however, on the price per share that FT should pay for Egypt's leading telecom company. According to OT, FT must purchase shares at LE 273.26 per share, Reuters reported. That's about 40 percent over current market value. Since the ICC ruling that FT would have to buy out Mobinil, OT stocks have gone through the roof, prompting some analysts to suspect that OT may be dragging its heels to boost its stock. But fortune may not continue to shine so favorably on OT's stock price if it becomes viewed as obstructionist. "I believe Mobinil [stock price] will fall and I think OT will weaken a little bit, said Diab. Shares in Mobinil, the session's most heavily traded share by turnover, rose 6.54 percent to LE 205.80 ($36.51), while Orascom Telecom gained 6.14 percent to LE 31.98, Reuters reported. Egypt's main stock index jumped 3.47 percent on Thursday, following regional markets higher despite delays in the sale of mobile operator Orascom Telecom's shares in Mobinil. Overall, the benchmark EGX 30 index hit 4,968.62 points while the broader EGX 70 index added 0.99 percent to 578.50 points, Reuters reported. "There is some speculation that there is going to be another tender offer by France Telecom, Amr Alaa of Prime Securities told Reuters to explain the rise in Mobinil's share price, adding that the market was expecting a tender in the range of LE 230 to LE 250. OT stands to lose roughly 19 percent of its revenue stream if FT succeeds in buying out its shares in Mobinil. Investors, however, were initially cashing in on the huge boost in cash on hand OT was suspected to gain in the transaction. OT had made aggressive moves in recent years to expand its telecom services to developing markets around the world, lessening its dependence on its Egyptian operations. In the latest chapter, both sides have claimed compliance with the ICC's court decision and both have accused the other of foul play. To date, analysts agree, there is no clear way out of the current situation. Unless a quick deal is struck, they say, the dispute may drag on for some time.
