Orascom Telecom has sold its 50 percent stake in Tunisian mobile operator Tunisiana to a Qatari-Tunisian consortium for US$1.2 billion, a deal which will help repay Orascom's debts.
The consortium includes Qatar Telecom's (Qtel) Kuwaiti unit Wataniya, which already owns 50 percent of Tunisiana, the Qatari fixed line and wireless carrier said on Monday.
Orascom's shares jumped 3.6 percent in early trade on Egypt's main index after the announcement of the sale.
Wataniya shares rose 2.1 percent to close at a two-year high.
Proceeds will be used to cut Orascom's debt, its parent company Weather Investments said.
"The proceeds of the sale will be used in part to repay Orascom Telecom's outstanding indebtedness and will therefore reduce the amount of indebtedness that will need to be refinanced by Vimpelcom as a result of the transaction," Weather said.
Weather Investments — the vehicle through which Egyptian billionaire Naguib Sawiris controls his telecoms empire — agreed on 4 October to sell most of Orascom's assets to Russian telecoms operator Vimpelcom in a potential US$6.6 billion deal to create the world's fifth biggest mobile phone operator.
But Sawiris has said the chances of completing the merger between his company and Vimpelcom are at best 50 percent. The deal faces hurdles in Algeria as well as regulatory issues in other countries.
Vimpelcom's board is expected to decide on the merger at a board meeting by the end of November or mid-December.
Wataniya has bought the Tunisiana stake from Orascom in a consortium led by Princesse Holding of Tunisia, Qtel said.
Of the 50 percent stake, 75 percent is expected to go to Wataniya and 25 percent to Princesse Holding, subject to approval by Tunisian regulators, a source familiar with the deal told Reuters.
Kuwait's National Mobile Telecoms Co (Wataniya), a 52.5 percent subsidiary of Qtel, and the consortium said it would work with Tunisian authorities to finalize the transaction and expect to close the deal with Orascom early January 2011.
Qtel has expanded rapidly abroad to mitigate the loss of its monopoly after Vodafone Qatar, a unit of Britain's Vodafone, entered the Qatari market.
Wataniya will finance its portion of the deal through a mixture of cash and debt.
"The deal will be financed by Wataniya. None of the proceeds from Qtel's bond issues will be used in financing the deal," a Qtel spokesman told Reuters.
Qtel's had launched a US$1.25 billion two-part bond issue in October.
Wataniya reported in October a 44.8 percent drop in 9-month net profit.