KEY THEMES
Telecom Egypt [ETEL] will likely top the headlines today after STC [KSA: 7010] early this morning made an official announcement on Tadawul, the Saudi stock market, concerning its talks with Vodafone Group [UK: VOD] to acquire its 55% stake in Vodafone Egypt [VODE]. STC said that the non-binding memorandum of understanding (MoU) it had signed with VOD back on 29 January (and was extended a couple of times later) has expired without reaching an agreement. STC cited “misalignment with relevant parties” as the reason behind the MoU’s expiration without a deal. That said, the dialog is still open between STC and VOD. While this will likely add further pressure on ETEL’s stock performance absent a clear deal, we understand that a deal is not totally off the table. We continue to see ETEL as undervalued whether or not a deal takes places.