CAIRO -

A few days separated the Egyptian parliament's approval to lend local banks to EgyptAir, and Telecom Egypt's announcement of an agreement with non-Egyptian banks to obtain a dollar loan of about half a billion dollars two days ago.

This is the second time for both companies to obtain loans within the past few years.

Parliamentarians objected to the loan risk on the country's national air carrier, but there was no similar uproar about the national carrier for data and communications services.

The succession of obtaining loans to Egyptian companies and the expansion in that direction has raised analysts' fears that lenders will lay their hands on the shares of these companies, in exchange for debts, when they default.

in published statements about the motives for obtaining loans;

Officials emphasized that the goal is to develop and help implement the required plans.

A recent press release of the company carried the assurances of the managing director and CEO of Telecom Egypt, Adel Hamed, that the company had signed an agreement to obtain a medium-term syndicated loan of $500 million to support capital expenditures and refinance existing short-term facilities.

The company’s management assigned the First Abu Dhabi Bank and Mashreq to be joint marketers of the loan, first principals and guarantors of coverage, similar to the medium-term joint loan obtained in the same month 3 years ago.

The role of the financing agent was assigned to First Abu Dhabi Bank solely, while Mashreq Bank was appointed as the account bank.

The final alliance of the banks financing the loan includes First Abu Dhabi Bank, Mashreq Bank, primary arrangers, guarantors of coverage and marketers of the loan, Ahli United Bank, first main arranger, Abu Dhabi Commercial Bank, National Bank of Kuwait, Arab Banking Corporation, Al Ahli Bank of Kuwait, and Arab Bank-Bahrain The European Arab Bank is the main arranger, the Bank of Jordan is the joint arranger, and Attijariwafa bank is the loan provider.

Telecom Egypt

Telecom Egypt is an integrated telecommunications company that the government owns most of its shares, and it individually provides landline phone services.

From time to time, there are criticisms from analysts in the telecommunications sector on the company's monopoly on the telecommunications infrastructure in Egypt, as it is the main divider for voice and data communications for the country, whether incoming or outgoing.

The company's management considered - in a press release - that the new financing agreement confirms the confidence of the international banking sector in Telecom Egypt's ability to continue its strong financial and operational performance over the coming years.

The period of the new loan extends to 6 years, which is contrary to the general custom of the market, with regard to dollar loans that do not exceed a period of five years, in addition to Telecom Egypt obtaining this loan at a “competitive” interest rate, according to the statement.

The CEO of the company continued by saying that "the aim of the new loan is to convert the short-term facilities in US dollars into long-term loans to enable the company to pay the installments in line with the cash flows."

He pointed out that the debt restructuring comes in line with the financing strategy that aims to reduce the volume of borrowing over time while reducing the cost of financing.

"We are confident that this step, along with the strong operational performance and the continuation of dividends from our investments, will contribute to the growth of the company's cash flow," he added.

The Egyptian parliament agreed earlier to lend local banks to EgyptAir (European)

tripping risk

On the other hand, Mostafa Shaheen, a professor of economics at the American University of Auckland, said that the expansion of Egyptian government companies to borrow, whether from abroad or inside, poses a serious risk to companies' ownership conditions.

He explained that Telecom Egypt obtained loans from non-Egyptian banks because government banks do not have enough foreign exchange, pointing out that Banque Misr had previously requested a $1 billion loan from the global market, which means that the Central Bank - despite its dollar reserves - He wants to save the reserves to help the Egyptian pound and support it internally.

And the economic analyst warned - in his speech to Al-Jazeera Net - that the current borrowing trend has begun to take the model of Turkey, which generated its current crisis that its external debts are mostly debts of Turkish companies.

The spokesman expressed his fear of a debt crisis on Egyptian companies, when they defaulted, warning of the inefficiency in managing and investing loans, and this opens the door for creditors to lay their hands on these companies in exchange for loans.

Telecom Egypt obtained loans and credit facilities in the first nine months of last year by about 3.6 billion pounds, compared to 4.8 billion pounds at the end of 2019.

According to the company's consolidated financial statements, the volume of loan installments and credit facilities owed by Telecom Egypt this year amounted to 14.5 billion pounds, compared to 11.7 billion pounds in the comparative period of the previous year.

Last Wednesday, the company announced the approval of the Board of Directors to approve the budget for the company and its operationally integrated companies for the year 2022, including the growth of total revenues.

A company statement confirmed that the company's budget for 2022 reflects its expectations towards the continuation of the "outstanding" financial and operational performance, and it is expected that the growth of data services - which continued during 2021 in the wake of the Corona pandemic - to increase the company's revenues next year through its various business units, both in ways directly or indirectly.

It is expected, according to the statement, that the company's capital expenditure will decrease in light of its approaching completion of the project to develop network capabilities and raise the quality of Internet services, with an increase in free cash flow through an increase in operating cash flow and efforts to rationalize capital expenditures.

And Egyptian telecommunications companies in general were among the biggest beneficiaries of the Corona pandemic in 2020, as Egyptians were forced to rely on the phone and the Internet to communicate and get work done, with companies issuing decisions for employees to work from home, as well as precautionary measures in mobility.