The wait is over

Sherine Abdel-Razek reports on a market

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Investors are preparing for the long awaited 20 per cent sale of Telecom Egypt either by holding back on buying or by selling existing holdings to free up cash. The offering, which started this week, is expected to attract a lot of interest from both local and international investors.

The market continued the recent downward trend, with the CASE30 index ending the week two points down. Overall market turnover almost halved, falling to LE2 billion.

The telecom sector witnessed several developments, beginning with the announcement of deregulation within the sector and ending with Orascom Telecom announcing its third quarter results.

Tareq Kamel, minister of communication and information technology, announced that the sector will be fully deregulated by the beginning of FY06. He also revealed that only two companies will be granted Voice over Internet Protocol (VOIP) licences so that service quality can be guaranteed.

The week brought statements that Egypt's third mobile network will start operating by the end of 2006 .The Ministry of Communication and Information Technology plans to provide the operator of the third network with additional facilities to enable it to compete on an even footing with Egypt's two current mobile operators.

Raya Holdings shouldered a heavy loss of 8.53 per cent to close the week at LE17.70 despite Raya's decision to consolidate its presence in the mobile phone market by concluding an agreement making it the sole distributor of Imate & Sagem in Egypt.

The sector's bellwether, Orascom Telecom, announced third quarter results in which its bottom line figure came in at LE2.9 billion, an 81 per cent increase on last year.

Prime Securities attributed the improvement to a 125 per cent year on year increase in OT's subscriber base which now stands at 25.5 million. It traded LE326 million worth of shares, ranking it second in terms of the value of transactions, and ended the week 0.8 per cent lower.

News of mergers and acquisitions continued to focus attention on the banking sector. Both Bank of Alexandria and American Express Bank set 30 November as the final date for offers to purchase the Egyptian American Bank (EAB). There is a fierce competition between the French Calyon Bank and HSBC Egypt to acquire EAB which is 41 per cent owned by the Bank of Alexandria and 34 per cent by American Express with the balance free floated. EAB has paid in capital of LE648 million.

The Lebanese Bank's (Blom) efforts to acquire a majority stake in Misr Romanian Bank entered a new phase. Blom offered to buy up to 87.47 per cent of MRB at LE11.82 per share. Some 30 per cent of the targeted equity is owned by Banque Misr.

The tender fixes the minimum stake to be acquired at 54.47 per cent. If the target is reached Blom's stake in MRB will increase from 12.53 to 67 per cent.

In the tourism sector Orascom Hotel and Development (OHD) invited shareholders to attend an EGA meeting on 6 December to vote on a maximum LE300 million capital increase to be generated by a private placement to new investors at par value. OHD will use the money to finance expansion plans in the UAE, Oman and Yemen. The company is also rumoured to be discussing a 20 million euro investment in Mauritius. On a related note, OHD has concluded procedures to increase its stake in several affiliated companies through a share swap estimated to be worth LE258.9 million.

News stirred some activity in the cement sector with Egypt's largest cement producer, Suez Cement, inviting shareholders to subscribe to a LE274.8 million capital increase at a par value of LE5/share.

National Cement Company released its first quarter results amid news of impending privatisation. The company posted net profits of LE155 million compared with LE12.15 million recorded over the comparable last year period. The impressive gains came on back of the company selling its stake in ASEC for LE97 million.

The building materials and construction sector maintained the highest growth of all sectors during the first quarter of fiscal year 2005/2006, advancing by 13 per cent.

Mostly positive macro-economic indicators -- not least first quarter growth of 5.3 per cent, and inflation at 3.1 per cent -- protected the market from further decline.