Market report

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The Egyptian stock market was yet one more winner in the bid for the country's third mobile licence that took place last week. The bidding process stirred a positive investor sentiment, boosting confidence in the market and the overall economy.

After long weeks in the doldrums, the market closed the week which ended 6 July with a 12 per cent gain in the CASE30 index. This was the market's highest weekly gain in two years. Overall market capitalisation also rose by LE28.9 billion, to reach LE406 billion.

The bullish sentiment was manifested in the early transactions of the current week. Foreigners were net buyers, as the previous week's market overall turnover reached LE4.4 billion. The average daily value of transactions was LE900 million, compared to LE400-450 million in the previous weeks.

ORASCOM TELECOM HOLDING (OTH): The telecom giant's Iraqi mobile network, Iraqna, has been granted a three-month extension to its current interim licence. Iraqna is the leading telecommunications operator in Iraq, in terms of the number of subscribers, revenues and network coverage. It was commercially launched in December 2003. In March 2006, its market share stood at 37.8 per cent. Iraq currently has a penetration rate of about 17.7 per cent, providing substantial room for growth.

In December 2005, the first licence expired and was replaced with Iraqna's current licence, which had been due to expire at the end of June 2006. During the current three- month renewed period, Iraqna will continue to pay a "revenue sharing" fee of 13 per cent of its gross revenues to the Iraqi Telephone and Post Company, as well as to other licensed mobile operators for interconnection and access services. Iraqna has put $257 million in investments since its inception.

TELECOM EGYPT: The company overcame the negative impact of losing the bid for the third mobile licence. The fierce bidding process exhibited the sound performance of the local telecommunication sector. Commenting on the auction, Chairman of Telecom Egypt Akil Beshir said: "while we are disappointed not to have won the auction, I am confident that our decision to be firm on price is in the best interest of our shareholders. The mobile market is growing strongly, but entry into that market has to make good financial sense, especially given our existing investment in Vodafone Egypt, which is already achieving strong financial results for TE.

The Itisalat consortium meanwhile has announced that the total investment for establishing Egypt's third mobile network may go beyond $1.0 billion. Itisalat expects that the number of mobile phone users will rise to 50 per cent of the population.

ORASCOM HOTEL DEVELOPMENT (OHD): The regional hotel and tourism company is bidding for a 6.25 million square metre plot of land in Sidi Abdel-Rahman on the Mediterranean north coast. The plot of land is being offered by the Holding Company for Tourism and Cinema. OHD plans to develop a self-contained resort with 3,000-5,000 rooms, in addition to a marina, a school and a golf course. According to HC Securities, there are currently 84 hotels on the Northern Coast, with a 6,572 room capacity. Only one of these is a five-star hotel, that is based in Al-Alamein. There are, in addition to this, two four-star hotels, and one three-star hotel. There are currently 27 hotels with 7,695 rooms under construction on Egypt's north coast.