Still the star5

VODAFONE-Egypt continued to hold a good position early this week with 25,991,000 million shares, representing around 10 per cent of Vodafone-Egypt shares changing hands on Sunday. The share closed at LE38.06 compared to an opening price of LE37.83. The company's share price hit the LE40 mark on the first day of trading on 21 December when no five per cent ceiling on the movement of the share price was in place.

In the meantime, during a meeting with the press, Akil Beshir, chairman of Telecom Egypt said that Telecom Egypt, which is set to buy 25.5 per cent of Vodafone Egypt, may for the next two years increase that share by buying from the stock market. During that two year period, Vodafone Group, which owns a majority 50.1 per cent stake may not buy additional shares from the other shareholders unless Telecom Egypt does not wish to buy.

Telecom Egypt's 25.5 per cent stake in Vodafone Egypt is through its ownership of half of a consortium called Wataniya which will be formed and owned equally by both Telecom Egypt and the Vodafone Group. Telecom Egypt ownership in Wataniya enables it to have control within Vodafone-Egypt without necessarily owning the majority stake. "No strategic decisions relating to Vodafone [will be taken] without the approval of the board of Wataniya," said Beshir. The chairman of Wataniya will be from Telecom Egypt while its chief executive officer (CEO) will be from the Vodafone Group.

Stable transit

THE SUEZ Canal Authority announced on 27 December that it would not change its transit fees for 2004. This marks the third consecutive year that the authority leaves fees unchanged, in an attempt to sustain its 2003 recovery.

Authority chairman, Ahmed Ali Fadel, also announced in a press conference organised in Ismailia, that reductions offered to long route ships, and ships carrying oil and natural gas would also be retained. 2003 has been a good year for the Canal Authority: transit fees have increased by 32 per cent from the previous year, amounting to $2.57 billion. The Authority's chairman attributed this jump in revenues to increased traffic.

Traffic rose from 13,447 vessels in 2002 to 15, 534 vessels in 2003, correlating with a tonnage increase from 445 million tons in 2002, to 548 million tons in 2003. The rise in traffic was also partly attributed to an increase of coal en route to Europe, as well as north-south petroleum transfers. The Suez Canal is considered a major foreign exchange earner for Egypt, it was nationalised in 1956 by the Egyptian government.

EU trade agreement

EGYPT and the European Union (EU) have signed an interim agreement last week by which the trade aspects of the Egypt- EU Association Agreement will go into effect. The agreement, which was signed in 2001, was ratified by the Egyptian parliament earlier this year. It sets the groundwork for cooperation between Egypt and the EU on various aspects including political and cultural issues and targets the creation of a free trade area between Egypt and the EU.

However, the agreement does not go into effect until all parliaments of the 15 EU member countries ratify it as well. To activate the trade aspect of the agreement, an interim agreement was signed by Egyptian Minister of Trade Youssef Boutros-Ghali and EU Trade Commissioner Pascale Lamy. Implementing the trade aspect of the agreement would mean that Egypt can start benefiting from the greater quotas provided for in the association agreement for its agricultural exports to the EU. And Egyptian industrial goods enjoy immediate free access into EU markets.

In the meantime, Egypt needs to start dismantling tariffs on EU industrial goods entering into the country. Egypt will start by dismantling tariffs on raw materials and production inputs which is expected to cut down on costs borne by local producers.

Under the association agreement, Egypt is supposed to liberalise its market and eliminate tariffs on EU goods entering the country over a transitional 12-year period from the date the agreement goes into force. During that period, elimination of tariffs will take place over four phases, starting with production inputs, then semi-manufactured goods and ending with final products. Automotives will be given the longest transitional period -- 16 years.

Orascom goes northeast

AFTER applying for licenses to operate mobile networks in Yemen and Pakistan, Orascom Telecom (OT) is heading north east to Iran. OT was short-listed to bid for Iran's second mobile phone network licence.

The move was not surprising as OT's chairman, Naguib Sawiris, was quoted early last year as saying that his company would focus on Iran, which he described as a high growth market.

Iran has one mobile network that is owned and run by the state. According to Reuters, only 3.5 per cent of the 70 million Iranian population subscribe to this network. The number can increase to around 20 per cent.

OT operates Egypt's first mobile network through its subsidiary MobiNil. It expanded its activities to Arab countries like Tunisia and Algeria, where subscribers reached one million two months ago and at a time was covering a handful of African countries before divesting its sub-Saharan subsidary Telecel last year.

Barclays buys BC's shares

AFTER much negotiation, an initial agreement was reached between Banque Du Caire (BC) and Barclays of London, where BC would sell its total shares in Barclays Cairo to Barclays London. Amounting to 40 per cent of the Cairo branch's total stock and valued at more than LE300 million, this deal signifies a return of confidence to the Egyptian market. It is also considered a victory for privatisation advocates, as it marks the first agreement for a full ownership transfer in one of Egypt's four largest banks.

The Central Auditing Agency has recently been evaluating Barclays Cairo's shares in preparation for approval of the purchase by the Central Bank of Egypt and the Higher Committee for Privatisation. The deal is to be signed by January 2004, when Barclays London will make some structural changes in the board of directors to reflect its new ownership.

Barclays Cairo's total capital amounts to LE240 million, divided over 2.4 million stock shares. BC currently owns 960,000 shares, which amounts to 40 per cent of the total capital, while 60 per cent of the shares are owned by Barclays London. This deal will transfer this 40 per cent to Barclays of London at a price of LE312 a share -- a LE212 increase from the stock's nominal value of LE100.

Barclays Cairo's revenue statement showed a jump in net profits from LE23.2 million at the end of September 2000 to LE67.3 million for the same period in 2003. Each share received LE37.42 from net profits, giving investors and privatisation advocates something to smile about for the holidays.

Japanese aid

FAYZA Abul-Naga, minister of state for foreign affairs and international cooperation, and Kazuyoshi Urabe, Japanese ambassador to Cairo, recently signed two agreements whereby Japan will provide Egypt with grant aid amounting to140 million Japanese yen to develop the water and irrigation sectors.

The first agreement provides Egypt with 96 million Japanese yen, about $900,000, to carry out the detailed design of a three-year project for rehabilitation and improvement of the Sakoula Regulator for the Bahr Youssef Canal. The main objective of this project is to provide irrigation water for 77,000 feddan (1 feddan is approximately one acre) in Minya and Beni Sueif governorates. It is also expected that new areas will be reclaimed after the rehabilitation and improvement process.

The second agreement provides a grant worth 44 million Japanese yen, about $400,000, to carry out a detailed design for a water supply development project in the north-western part of Sharqiya governorate.

At a press conference held last week, Abul-Naga explained that the project will provide clean water to 600,000 inhabitants in Hehia, in the Sharqiya governorate, and that it is part of a comprehensive water network. The main objective of this project is to improve the water supply to the habitants in Sharqiya governorate, through increasing both the quantity and the quality of the water supply.