Market report

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Foreigners are buying heavily into the market, accounting for 23 per cent of the overall transactions to the tune of LE5 billion. Thanks to their strong presence during the week ending 10 August, the market once again witnessed many transactions. The increasing interest in the market continued until Sunday, the first day of the current trading week, with the CASE 30 Index -- which tracks the performance of the most active listed companies -- breaking the 5,800 threshold.

Analysts believe that the bid won by the UAE-based Emaar to develop the North Coast's Sidi Abdel-Rahman tourist area is an indicator of confidence in the economy.

MOBINIL: Egypt's first mobile phone network was notified by the National Telecommunication Regulatory Authority (NTRA) that it needs to acquire a special licence for providing EDGE technology to its customers. MobiNil has introduced some services using EDGE technology, also known as the 2.5 Generation (2.5G), in Cairo, and was planning to introduce it in several other cities by the end of 2006. It is yet unknown if this would cause MobiNil to change its previous announcement that it will postpone applying for the costly 3G licence until next year.

Both MobiNil and its rival Vodafone Egypt operate their network with 2G technology, while the new mobile phone network is licenced to use both 2G and 3G technologies. The new company will be owned by a consortium of the UAE-based Itisalat, the Egyptian Post Authority, the National Bank of Egypt (NBE) and Commercial International Bank (CIB). Should MobiNil and Vodafone Egypt want to acquire a 3G licence, each must pay LE3.34 billion in addition to a 2.4 per cent annual royalty fee of gross operating revenues.

A research report issued by HC Securities expected that the two operators will pay the 3G licence fee during 2007 "in order to increase the spectrum of their network and maintain the quality of service without affecting their expansion plans." More importantly, both operators don't want to lose around 1.1 million subscribers (the possible 3G addressable market).

HC Securities gave MobiNil a "Strong Buy" recommendation as it assessed its target price at LE192 per share, which is 37 per cent higher than the current price of LE140.

EFG-HERMES was, as usual, the market's leader since it managed single-handedly to corner LE2.17 billion of turnover on the back of encouraging news. The financial services company was rumoured to join an alliance, with the venture capital company Citadel Capital, to buy Alexandria Mineral Oil Company (AMOC). Press reports said that the alliance is competing with seven other groups submitting letters of intention and initial offers to buy AMOC. Competitors include the Kuwaiti Al-Kharafi Group and the Kuwaiti Holding Company. However, the company said in a statement sent to CASE authorities that it will only act as a financial advisor to Citadel.

Moreover, EFG has been in the spotlight since its board of directors approved the offer by the financial house Abraaj to buy a 25 per cent stake of Hermes through a capital increase. The offer is still pending approval of the Capital Market Authority.

MIBANK plans to hold a general assembly in a few days to settle disputes about its Employee Fund, in preparation for the bank's full merger into NSGB by the end of August. The Employee Fund currently has a deficit of LE600 million. The bank announced its first half profits at 89.8 per cent lower than the corresponding period of 2005, to reach LE7.02 million in 2006. The decline in profits was caused by the high provisions placed to cover the bank's high rate of non-performing loans, estimated at 18 per cent of MIBank gross loans. Provision charges rose by 181 per cent when compared to the first half of 2005.

TELECOM EGYPT's general assembly renewed the tenor of its chairman and managing director, Akil Basher. Other board members include government representatives, and three independent members.

ORASCOM HOTELS AND DEVELOPMENT'S (OHD) CEO Samih Sawiris said in a press report that the company is planning another project on new land, similar to that of Sidi Abdel-Rahman on the North Coast. Earlier this week, OHD lost a bid to develop the tourist area on the Mediterranean coast to the UAE-based Emaar company.

Compiled by Sherine Abdel-Razek