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Al-Ahram Weekly 27 May - 2 June 1999 Issue No. 431 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly 27 May - 2 June 1999 Issue No. 431
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| Published in Cairo by AL-AHRAM established in 1875 |
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Egypt Region International Economy Opinion Culture Profile Living Features Travel Sports People Time Out Chronicles Cartoons Letters Loss-making but heavily traded
by Sherine Abdel-RazekPOSTING losses is an expected development during any company's first year of operation, and MobiNil is no exception. But what is exceptional, almost amazing is that despite its losses, the company's shares are sky-rocketing. The value of the company's shares has recorded a 450 per cent increase since its market debut in February 1998.
Investors who paid LE10 for the share then can now make a capital gain of LE40-45 per share, It is, in fact, this profit-taking process which, according to the experts, has caused the fluctuations that occurred in Mobinil's share value during the past two weeks. Profit-taking means that investors -- satisfied by the level which the share has reached -- have started to divest some of their holdings in their quest for capital gains. This process results in moving the share value up and down.
The fluctuation of the past two weeks comes in the wake of a continuous and uninterrupted upward trend which the share witnessed from the second week of March until the first week of May, reaching its highest ever level of LE55. Since then, the price has been rising and falling within a narrow range of 1-2 per cent.
This marginal loss comes in spite of active transactions in the company's shares. Last week LE1,16.5 million worth of Mobinil's shares changed hands, accounting for 23 per cent of the market's overall transactions .
Before this lapse, the escalating share value was an eye-catching phenomenon, with daily gains almost reaching the five per cent ceiling of permitted daily increases of listed companies. This was at a time when most of the shares of other companies on the market were either flat or losing momentum. The increasing demand on the share can be attributed to its being the only hi-tech share traded on the Egyptian market. The increasing number of subscribers in its network, which reached 226,000, was another factor encouraging investors to buy the company's shares.
The LE162 million loss which the company posted during fiscal year1998 didn't detract from appeal of the company to the investing public. This was attributed by experts to the fact that the loss was actually less than expected during the company's first year of operation, given that it had to pay LE1.7 billion in order to obtain the license for operating Egypt's first mobile network -- which had been previously operated by the government-owned national telecommunications company.
Now, after the announcement of Mobinil's first quarter results, it is expected that future demand on the shares might increase, reviving the company's share value. Mobinil's revenues during the first three months of 1999 reached LE225 million, a 22per cent increase over the projected LE209 million. The company's LE22.5 million net loss should be compared to a budgeted net loss of LE 82.7.
