Court orders Mobinil sale to France Telecom

France Telecom SA won a controlling stake in Egyptian Co. for Mobile Services (ECMS), Egypt's No. 1 mobile phone company by subscribers, after an arbitration panel ruled in its favour in a dispute with Orascom Telecom Holding SAE.

Orascom Telecom and France Telecom said late Sunday that the Arbitration Court of the International Chamber of Commerce ruled in favour of the Paris-based firm in a 2007 dispute in which Orascom wanted France Telecom to transfer its majority shares of the Egyptian phone service provider Mobinil.

The dispute, which neither company detailed, arose from a 2001 agreement focusing on their stakes in the joint venture Mobinil Telecommunications, which in turn holds a 51 per cent stake of Mobinil itself. The arbitration process began in 2007 when Orascom sought a ruling that France Telecom transfer to it all of the French company's stake in Mobinil, France Telecom said in its statement.

The two companies offered differing prices for the transaction. Orascom, the largest mobile-phone provider in the Middle East and North Africa, said in an e-mailed statement that it might receive about $1.7 billion for its stake. France Telecom said separately that the acquisition would cost about €530 million ($715 million).

Orascom said the proceeds would be used to enhance and support its future expansion plans. The company already has operations in a number of other countries, including Algeria, Pakistan, Bangladesh, Tunisia, Zimbabwe and North Korea, but those divisions are not affected by the ruling. The arbitration panel's ruling only applies to Orascom's stake in Mobinil Telecom, France Telecom said. It doesn't apply to the 20 per cent stake in Mobinil that Orascom holds directly, the French company said.

France Telecom, Europe's third-largest phone company, will be able to consolidate Mobinil's earnings into its own accounts after the transaction is completed. The company bought assets in Kenya and Uganda last year to gain subscribers as growth slows in more mature markets.

France Telecom said in a statement that the ruling gives it "full control over the leading mobile operator in Egypt," and would be able to consolidate ECMS's entire financial results into its books, giving it an additional revenue of over €360 million ($487 million) and €165 million of earnings before interest, tax, depreciation and amortization. France Telecom's revenues in 2008 were €53.49 billion.