An overall decline in international markets took a toll on regional markets with heavy selling by foreign institutions during last week. The CASE30 falling 4.1 per cent, the steepest drop among its regional peers, the Abu Dhabi market fell 3.45 per cent, the Dubai market dropped 1.86 per cent, while the Saudi Tadawul declined by 1.24 per cent. Since the Egyptian market is the most heavily owned by Western institutions in the region, it is most vulnerable to any slowdown in international markets.
Despite last week's downward spiral of Egypt's stocks, the market ended July's trading remarkably high with the CASE30 index 5.6 per cent higher than June's trading, and 18 per cent up from its level at the start of 2007.
MOBINIL, Egypt's largest mobile network operator, posted a 38.9 per cent increase in net profits to reach LE913 million during the first half of 2007, compared to the corresponding period of 2006. The growth in profits came on the back of a 32.1 per cent increase in sales to reach LE3.85 billion, and an increase in the company's subscriber base to 11.9 million at the end of June 2007, compared to 7.23 million at the end of the first half of 2006.
However, the structure of the company's subscriber base changed drastically as postpaid subscribers declined by 19.8 per cent, while prepaid subscribers increased by 74.4 per cent. This changed the company's subscriber base from 10.5 per cent postpaid subscribers and 89.5 per cent prepaid subscribers to 5.1 per cent and 94.9 prepaid, respectively. According to HC Securities, this aggressive increase in the number of subscribers aligns with MobiNil's new strategy of focussing on adding new subscribers regardless of their profitability in the short-run. The company believes that a strong subscriber base will be profitable in the long run in the face of fierce competition expected from the third operator.
RAYA HOLDING, the leading technology and telecommunication company, appointed the local Prime Capital as an independent financial consultant to present an evaluation for the bid of Orascom Telecom Holding (OTH) to buy 100 per cent of Raya Holding. OTH offered to buy floating shares of Raya Holding's firm at LE12 per share in a deal worth LE684 million, but Raya Chairman Medhat Khalil described the price as too low.
Meanwhile, the Kuwaiti Watheeqa Group which owns 10 per cent of Raya has offered to buy an additional five million shares to help fend off the takeover by Orascom Telecom. If its offer is approved by the Capital Market Authority, Watheeqa would increase its stake in the company to 18.8 per cent.
Khalil, who owns 4.1 per cent of Raya, stressed last week that the majority of shareholders are determined not to sell at LE12. He explained that being acquired by OTH, the parent company of MobiNil, would affect Raya's partnership with MobiNil's rival, Vodafone Egypt. Vodafone Egypt has a strategic partnership agreement with Raya, whose retail shops exclusively sell the mobile operator's services and products.
Shareholders of Raya include Watheeqa, Medhat Khalil, Financial Holdings with 12 per cent, the Al-Tawil family with 8.8 per cent, and Suliman Aba-Numay with 9.6 per cent of shares. Around 55 per cent of the company's shares are free floated.
ORASCOM TELECOM HOLDING (OTH)'s founder and chairman Naguib Sawiris finalised a deal through his company Weather Investments to buy out Tellas, Greece's second largest phone company. The Greek power utility Public Power Corp (PPC) which owns 50 per cent minus one share of Tellas, accepted a 175 million euro offer from Weather Investments for its stake in Tellas.
This came less than six months after Weather Investments acquired Greece's third-largest mobile phone operator, Wind Hellas. Weather Investments owns more than 50 per cent of OTH and also owns Italy's Wind Telecom. Sawiris said earlier this month he was eyeing expanding his interests in Greece beyond the telecom sector, to areas such as media and banking.
On a related note, the CASE's listing committee approved OTH's capital decrease from LE1.1 billion to LE1.09 billion, through terminating 10 million treasury stocks at a par value of LE1 per share. As a result, the company's outstanding number of shares will be 1.09 billion shares at a par value of LE1 per share, effective 1 August.
NATIONAL SOCIÉTÉ GÉNÉRALE BANK's first half results showed a 28.9 per cent increase in its net profits, to reach LE339.3 million compared to the same period of 2006. The increase stemmed from an 18.1 increase in operating income, driven by strong net interest income, and no significant increases on the cost side. This is coupled with only a minor rise of 6.5 per cent in general and administrative expenses, including goodwill amortisation, to reach LE479.5 million.