Market report

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The market broke a new record high through the week ending 27 September to touch 8,674 points, marking a 24 per cent increase since the beginning of 2007. The value of transactions reached LE6 billion through the week.

Market analysts believe that the upward trend will continue for some time, and expect the CASE30 to reach the 9,000 points threshold soon backed by the positive performance of the blue chips and sound macro-economic indicators. According to a World Bank report, Egypt has been identified as the world's most improved business reformer, including reforms in company registry, credit system and the structure reform of customs. Egypt's ranking for doing business rose to 126th on the World Bank's chart of 178 countries, which looks at business regulations and the pace of economic reforms. The improvement compares with Egypt's ranking last year which came at 165th place.

Also during the week, the Ministry of Investment signed a deal with the British consultancy firm McKenzie to define the 10 best performing sectors in the economy, in order for them to be promoted by the General Authority for Free Zones and Investment.

Meanwhile, a 19.8 per cent jump in the number of tourists visiting Egypt in July this year compared to last year also came as a positive indicator. Some 951,500 tourists visited Egypt in July, while arrivals through the seven months ending on July reached six million tourists.

TELECOM EGYPT (TE), Egypt's sole fixed line operator is still negotiating with the country's three mobile operators about changing the fees on calls between mobiles and fixed line. TE wants to reduce the fees the mobile companies acquire from these calls; they currently take 60 per cent of the value of these interconnection fees, with TE acquiring the remaining 40 per cent. If the companies do not reach an agreement, TE will have to resort to the National Telecommunication Regulatory Authority (NTRA).

The company will soon lose its monopoly over fixed lines, since the NTRA is planning to offer a second fixed line licence in early 2008. Moreover, NTRA revealed that it is granting a Wi-Max connectivity licence to the winners of the second fixed-line operation licence. Mobile operators have the right to join the bidding process.

On another front, TE announced that barriers facing the company's investment in the Consortium Algerian de Telecommunication (Lacom) appear to be relaxing, as the Algerian Post and Communication authorities have stepped in to suspend free-of-charge offers made by Algeria Telecom.

VODAFONE EGYPT (VE) is no longer listed in the local bourse since CASE's Listing Committee approved its delisting on 26 September, after owners of the three per cent free floated shares sold their holdings to the company's major shareholders Vodafone Group and Telecom Egypt. Shares of the company are removed from the CASE database and can now be traded through the "over the counter" Orders Market.

VE, together with the two other mobile operators MobiNil and Itisalat, is currently under fire due to recent disruptions in services. NTRA Chairman Amr Badawi last week threatened to take serious action to prevent mobile companies from operating their networks above capacity, which leads to poor services. Badawi said that the NTRA may even consider prohibiting operators from adding new subscribers in order not to overload the networks.

Meanwhile, the mobile number portability (MNP), which allows users to switch from one operator to another while retaining their mobile number, is planned to be introduced in November.

ORASCOM TELECOM HOLDING (OTH)'s new partner in the Iraqi mobile operator Iraqna, Korek Telecom, will obtain a $250 million loan from the Kuwait-based Agility -- the largest logistics firm in the Middle East. Korek will use the loan to finance its partnership agreement with OTH which owns 70 per cent in Iraqna, while Korek holds the remaining 30 per cent stake. Korek paid $1.25 billion last month for a mobile licence in Iraq, one of three that were awarded there.

NATIONAL CEMENT COMPANY (NCC), the only state-owned cement company, is planning to establish a new plant named Al-Nahda Industries with a production capacity of LE1.5 million and overall investments estimated at LE600 million. Construction work on the new plant is pending approval by the Ministry of Industry. NCC will hold a 30 per cent stake in the new plant.

NCC's cement exports retreated by half during the fiscal year 2006/2007 to reach 400,000 tonnes. The company attributed the decline to an increase in local demand.

EGYPTIAN ELECTRICAL CABLES (ECC) will use LE100 million in proceeds from a LE250 million capital increase to reinforce its working capital to buy production inputs. An equal sum of money will be used to repay the company's debts.

Monies allocated for developing existing plans stand at LE30 million, while the remaining LE20 million will cover ECC's early retirement plan. ECC has been losing money for several years now, with its bottom line in the year ending June, 2007 showing a net loss of LE13.3 million.

Compiled by Sherine Abdel-Razek