Sunday, the first trading day after the announcement, the market digested the effect of the Central Bank of Egypt's (CBE) decision to raise the interest rate on Sunday, with a minimal decline of 0.3 per cent. The selling spree started on the last two trading days of the week ending 2 November, and continued with Arab investors trying to get out of the market to compensate for their losses in the bourses back home which took the lowest dip of the year.
The average daily trading came at LE1 billion compared to a relatively stagnant market during Ramadan, where average daily transactions did not break the LE500 million threshold.
ORASCOM TELECOM HOLDING (OTH) has given many reasons to its investors to be cheerful during the past two weeks. The company's 19 per cent-owned subsidiary Hutchinson Telecommunications International Limited (HTIL) added three million subscribers during 2006, to reach 26.5 million -- recording a year-on-year growth of 76 per cent.
HTIL had a consolidated net profit of $13.2 million in 2006, turning around its net loss the year before. HTIL is a leading provider of telecommunication services in emerging Asian markets with activities in India, Hong Kong, Thailand and Israel. It is expected to launch operations in Vietnam in early 2007, followed by Indonesia.
OTH bought a 19.3 per cent stake in the company last year and expressed interest in increasing the stake earlier this year. However, no specific offer or time frame was announced for the proposed acquisition.
In another development, OTH signed an agreement with Emirates International Investment Company to purchase a 7.9 per cent stake in Orascom Telecom Algeria (OTA) for $399 million. The deal will result in OTH increasing its stake in OTA from 87.7 per cent to 95.6 per cent. This is the second time that OTH increases its stake in the company that operates the Djezzy network, since it raised its holdings in the company from 59.31 to 87 per cent earlier this year.
As of 30 June, 2006, OTA represented 23.1 per cent of OTH's subscriber base and contributed 39 per cent of its GSM revenues. OTH's presence on the Algerian market is not limited to its mobile network, since it won a 15-year licence in March 2005 to build and operate a national fixed line network in Algeria as part of an Egyptian Consortium. The consortium includes Telecom Egypt, of which OTH owns 50 per cent. The licence stipulates a two-year exclusivity period to operate national and international fixed line services.
THE EGYPTIAN COMPANY FOR MOBILE SERVICES (MobiNil) increased its subscriber base by 35 per cent during the year ending September, 2006 to 8.1 million subscribers. The number of subscribers in the fourth quarter of the same year increased by 12 per cent due the newly added promotional products. MobiNil efforts to attract more customers, especially from the low income segment, included offering a plan consisting of low priced handsets together with phone lines.
In July, 2006, it also launched a new product "Alohat" that features per-second off-peak tariff, and Egypt's lowest SMS rate. Two months later, MobiNil cancelled administration fees on pre-paid cards, a move that is expected to attract even more subscribers.
Meanwhile, observers believe that MobiNil will soon apply for a 3G licence, especially after the National Telecommunication Regulatory Authority (NTRA) decided to suspend it from offering services under EDGE technology (2.75G) pending its acquisition of a 3G licence.
THE COMMERCIAL INTERNATIONAL BANK (CIB) joined forces with a number of partners to form a financial services and investment banking company under the name Commercial International Capital Holding (CI-Capital). CIB, Oasis Capital Egypt, Dynamic Securities Trading, and Orascom Telecom and MobiNil Chairman Naguib Sawiris (in his personal capacity) finalised an agreement to form a strategic alliance by which all parties will consolidate their financial services and investment banking businesses into CI-Capital.
According to an HC Securities research note, Sawiris -- along with a number of Oasis investors including the Saudi-based Olayan and the UAE-based Al-Futtaim families -- will pump new capital into CI-Capital to finance the company's ambitious growth strategy. They aim to "create the pre-eminent investment and merchant banking institution in Egypt and across the Gulf region."
BESIX GROUP, Orascom Construction Industries' (OCI) 50 per cent-owned subsidiary, acquired two ready-mix concrete, asphalt and road construction Belgian companies worth $40 million. The two companies, SOCOGETRA and COBELBA, have operations in Belgium, France, Luxembourg and Hungary. The transaction is currently being reviewed by the relevant antitrust authorities.
While the deal is not expected to push OCI's revenues in the short term, it will consolidate its European presence. According to an HC Securities' commentary on the deal, the two newly acquired companies are expected to record revenues of $110 million in 2006, contributing to OCI's bottom line by less than $4 million. This amounts to less than one per cent of OCI's consolidated net profits in 2006.
OCI's Chief Executive Officer Nassef Sawiris said the deal would affirm OCI's drive into two strategic activities, infrastructure concessions and construction, as well as the production of aggregates and ready mix.
BESIX provides engineering, procurement and construction (EPC) services for public and private large commercial infrastructure and maritime projects. The group has a long list of landmark projects in the Middle East, including Burj Dubai Tower which will be the world's tallest building standing more than 700 metres high and the Sheikh Zayed Bin Sultan Al-Nahyan Mosque in Abu Dhabi.
Compiled by Sherine Abdel-Razek