France Telecom buys service contract from Egyptian partner

France Telecom will pay Egyptian partner Orascom Telecom Media and Technology (OTMT) 110 million euros (US$142.30 million) for taking over a management services contract for their mobile phone venture Mobinil.

Egypt is a key part of France Telecom's efforts to expand in high-growth emerging markets such as Africa and the Middle East. It bought most of OTMT's stake in Mobinil this year for 19 billion Egyptian pounds ($3.11 billion), lifting its majority stake to 94 percent.

OTMT's announcement of the France Telecom payment surprised some analysts, who had expected the Egyptian company simply to lose the service contract fees because of its reduced ownership of Mobinil.

EFG Hermes investment bank said in a research note that it has increased its valuation of OTMT by 26 percent to 0.80 Egyptian pounds per share as a result of the France Telecom payment.

Egyptian shares of OTMT were up 9.4 percent at 0.58 pounds by 1220 GMT.

OTMT has been left with about 5 percent of Mobinil, which vies with a Vodafone joint venture for dominance of Egypt's mobile market.

One trader said that the shares were driven higher by retail investors speculating that OTMT could soon sell its remaining Mobinil shares or issue a dividend out of France Telecom's payment.

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