Add MEEF to
launched online trading services in the UAE last May, after
which the company’s trading volumes grew tenfold in a market
where online trading accounts for more than 15% of activity.
In the Saudi Arabian market, online trading accounts for
more than 50% of traded volume.
Egypt's Economy in the Eyes of the World bank
of the 175 economies reviewed by World Bank Group’s Doing
Business Index, Egypt is ranked 165, putting it ahead of
only poverty-stricken countries such as Sierra Leone and
Eritrea, many of them with active civil wars.
World Bank to Egypt: You Stink
Business Today - Egypt
By Fatima El-Saadani, Andrew Bossone, Hania
Moheeb and Dan Reese
The index ranks the economies based on the ease of doing
business. Using 10 equally-weighted indicators developed by
the World Bank Group’s finance and private sector vice
presidency, economies are assessed in various categories,
from the ease of starting a business and hiring employees,
to the degree of investor protection.
While the rankings are based on studies of existent laws and
regulations, interviews with regulators or private-sector
professionals, and cooperative arrangements with other
departments of the World Bank and other donor agencies, the
index is still limited in scope, as admitted by the index
The index fails to take into account every country’s
location and proximity to markets, the quality of its
infrastructure services, property security from theft,
macro-economic conditions or the strength of underlying
The 175 economies covered by the survey for the 2007 report
include 22 high-income Organization for Economic Cooperation
and Development economies as benchmarks, 28 economies from
Europe and Central Asia, 45 from Africa, eight from South
Asia, 31 from Latin America, 17 from the Middle East and
North Africa and 24 from the East Asia and the Pacific
Among the 155 countries surveyed for 2005 and 2006, Egypt
dropped from number 141 in 2005 to 146 in 2006. While
indicators on starting a business have improved (from 115 to
113), licensing a business has become harder according to
the survey, bringing Egypt down from 146 to 149.
The report claims that even closing a business has become
more challenging (from 106 to 113) and despite the changes
to the tax law, paying taxes has become more difficult in
the opinion of the World Bank.
On the bright side, Egypt can congratulate itself on the
increasing ease of hiring labor (from 140 to 128) and
registering property (from 129 to 125).
By comparison, the World Economic Forum’s Global
Competitiveness Index for 2006, released last year, Egypt
ranks sixty-third — down 11 places from 52nd in 2005. The
Index ranks Switzerland and Scandinavian countries as the
most competitive economies in the world, proving that
competent macro-economic management, world-class education
and a focus on technology are the key to competitiveness.
Egypt finished one place behind Russia on the WEF index.
Egypt Revives Nuclear Power Program
Just before Ramadan, Egyptian officials announced plans to
revive the country’s civilian nuclear power program that had
been frozen 20 years ago after the Chernobyl nuclear
disaster in the former Soviet Union.
A fully functioning nuclear power plant will be built in the
Mediterranean city of El-Dabaa within 10 years’ time to meet
demand for electricity, which increases about 7% per year,
threatening the country with upcoming shortages.
The plant is expected to cost an estimated $1.5 billion and
the government says it will seek foreign investment for the
The plan for nuclear power was revealed by Gamal Mubarak at
the National Democratic Party’s annual meeting. Political
commentators see the meeting as preparation for Gamal’s
succession to the presidency. Meanwhile, Minister of Foreign
Affairs Ahmed Abul-Gheit welcomed the International Atomic
Energy Agency endorsement of Egypt’s proposal to apply the
safeguards system of the IAEA to all nuclear activities and
installations in Middle East countries, including Israel.
Arab countries accuse Israel of ignoring its IAEA
Indian Giant Buys Finacée Hair Care
Indian beauty-products maker Marico has acquired Fiancée,
the Egyptian market leader in hair care products. Fiancée,
which controls about 20% of the estimated LE 215 million
market, manufactured and marketed its products under the
Ready Group brand for 15 years. Financial details of the
deal were not disclosed.
According to Indian news sources, this is Marico’s fifth
acquisition in 18 months. International sales have
contributed to about 10% of the Indian company’s revenues.
“This footprint in Egypt will help us widen our strides in
the international haircare market,” Marico Chairman Harsh
Mariwala said in a company statement.
Marico has made the first of its payments, which will
continue through the next six months using a short-term
loan. Ernst & Young India advised Marico on this
transaction. The Ready Group was advised by HC Securities &
Investment, Cairo, Egypt.
Vinci Group Tops Leader Board for Metro
The financial bids for Cairo’s third Metro line revealed
France’s VINCI Construction Group to be in the lead with the
lowest offer, just undercutting competition from Spain’s
Obrascón, Huarte and Lain. The project’s civil works budget
is estimated at 300 million (LE 2.2 billion).
The third line will connect urban centers from northwest
Cairo in Imbaba to the northeast in Heliopolis, eventually
extending to serve Cairo International Airport. The third
line will cross the Nile and extend for an approximate total
length 30 kilometer, most of which will be underground.
The French company offered the bid in partnership with
Arabco, Bouygues and Orascom Construction Industries (bt100
VINCI has also undertaken projects such as the Athens metro
and the Budapest and St. Petersburg railways.
Industrial Exports Rise
Minister of Finance Youssef Boutros-Ghali announced that
recent GDP growth has been fueled by a 25% increase in
export revenues during the last year, in addition to
increased private sector investment.
A 30% increase in industrial exports indicates that Egyptian
products are becoming more competitive in the global market.
The recent changes seen in the economy are promising,
especially as the government strives to regain investors’
Speaking at the Euromoney conference held on September 11,
Boutros-Ghali said there were expectations of a 12% decrease
in tax revenues during the first year of the new tax law,
and 5% during the second, with increases expected only three
years after its introduction. Collection figures since the
new tax law came into effect, however, show a 17% increase
The minister added that the distribution of subsidies should
be revised to reallocate the current LE 40 billion in energy
subsidies and LE 30 billion in educational subsidies to
services that the public would rather have, to be determined
by a national poll.
Tea for Two
The Tea Board of Kenya says Egypt is the largest market for
Kenyan tea, overtaking Pakistan as its top importer.
Tea is increasingly becoming one of the more important
import goods for the country. From 1994 to 2003, imports
rose by 38%, and national consumption by nearly 36%,
according to the Food and Agriculture Organization of the
Under the Common Market for Eastern and Southern Africa,
Kenya has had a competitive advantage since 1998 with only a
3% tax, which has helped it overtake Sri Lanka as the
biggest tea exporter to Egypt.
In March, the Ministry of Investment also opened the market
from India by reducing its tea import tax from 30% to 5%.
India is the world’s largest producer, and could take
advantage of a drought in Kenya that has reduced its exports
by 16% from last year.
Naeem Holding to List on CASE?
Naeem Holding has asked list its shares on the Cairo and
Alexandria Stock Exchange, with a capital of $240 million
distributed among 240 million shares at a par value of $1
The CASE administration has since announced that the listing
committee might decide to list the shares as unofficial
Naeem Holding is an Egyptian company with majority stakes
held by Saudi Arabia-based Naeem that has taken over several
other Egyptian companies operating in the field of
investments and securities.
Benefits from Deficit
Egypt now has a trade surplus of $395 million through the
first three quarters of 2006, a shift of more than $1
billion from the end of the previous year’s deficit of $700
Although a free trade agreement with America is still on the
shelf, Egypt is certainly benefiting from the Qualified
Industrial Zones agreement, particularly in textile exports,
which rose to $252 million during the first four months of
2006, according to the Ministry of Trade and Industry.
Meanwhile, the US trade deficit has exploded under President
George W. Bush. The US Department of Commerce reports it has
risen to $218.4 billion through June of this year. Although
the US has been one of Egypt’s strongest trade partners,
Minister of Trade and Industry Rachid Mohammed Rachid said
China will likely supplant America in a few years.
Crédit Agricole Egypt ups EHFC Stake
Crédit Agricole Egypt has upped its stake in the Egyptian
Housing Finance Company from 40% to 50%, buying up the Bank
of Alexandria’s stake. Crédit Agricole Egypt President
Yassin Mansour had announced that real estate financing was
one of the two sectors the bank is considering expanding
EHFC was established in 2004 and began operations in 4Q04.
The company has a paid-in capital of LE 50 million and an
authorized capital of LE 100 million. The company is 50%
held by Crédit Agricole Egypt, 20% by the International
Finance Corporation, 20% by the OPEC Fund for International
Development and 10% by India’s Housing Development Finance
EFG-Hermes ReceivesEgyptian Online Trading License
Late in September, Egypt’s Capital Market Authority granted
EFG-Hermes (EFG, bt100 number 26) a license to provide
online trading services in the country.
EFG, established in 1984, is a regional investment bank and
market leader in securities brokerage, asset management and
private equity with a market capitalization in excess of $2
billion. Besides its regional investment banking operations,
EFG recently acquired a leading stake in Lebanon’s Bank
In the UAE, EFG recently inaugurated its Brokerage Contact
Center — a hub for more than 600 IP-based phones in the
region — allowing EFG-Hermes clients to buy or sell UAE
securities and access stock and cash-position information by
UAE Bank Eyes NBD
The National Bank for Development announced that an
as-yet-unnamed UAE-based bank has received approval from the
Central Bank of Egypt to conduct due diligence on NBD, a
preliminary step towards its acquisition.
NBD was up for grabs before, when Commercial International
Bank completed its due diligence, but dropped its bid in
February 2006, setting its sights instead on newly
on-the-market Bank of Alexandria.
While officials have denied that Union National Bank,
National Bank of Abu Dhabi and Mashreq Bank are bidding for
NBD, there are further rumors that Dubai Islamic Bank is a
possible candidate, aiming to grab NBD’s 20 Islamic banking
Selling NBD has been one of the suggested alternatives to
increasing the banks’ LE 286-million capital to meet CBE
minimum requirements of LE 500 million. NBD has recorded
consecutive losses since 2002 as it has upped its provisions
to cover non-performing loans. For 1H06, NBD announced net
losses worth LE 50.7 million.
NBE Expands Regionally
The National Bank of Egypt opened three representative
offices last month, one each in Dubai, Abu Dhabi and
Sharjah, in a bid to expand its business across the Arab
A high-level delegation led by NBE Chairman Hussein Abdul
Aziz also signed a partnership protocol with UAE’s Al-Fardan
Financial Services Company to provide services to investors
interested in the Egyptian privatization program and stock
The three UAE branches mark the first step towards regional
expansion after the NBE’s earlier ventures into London, New
York, South Africa and China.
Banque Misr’s assets top LE 160 billion
Banque Misr Chairman Mohamed Barakat announced that the
merging of Banque Misr and Banque du Caire will be complete
by the end of 2006, creating a strong new bank with assets
worth LE 160 billion.
The new bank will operate under the Banque Misr name and
should be able to compete against the new foreign banks that
are entering the Egyptian market. The decision to merge the
two banks was announced on September 25, 2005.
CIB Leads Suez Cement Refinancing
CIB arranged a LE 1.5 billion bridge facility for Suez
Cement along with mandated lead arrangers Banque Misr, Bank
of Alexandria, BNP Paribas, NSGB (bt100 number 23), Crédit
Agricole Egypt, HSBC, Barclays Bank Egypt and Arab African
The facility is a refinancing package originally extended to
finance part of Suez Cement’s acquisition of ASEC Cement for
a total LE 1.2 billion.
ASEC Cement (previously Helwan Cement) was sold for LE 4.6
billion in total, LE 3.4 billion of which was the value of
the company’s shares. The remaining LE 1.2 billion has been
financed by a medium-term loan granted when the sale was
concluded last year.
The refinancing package covers both a four-year medium-term
loan for LE 900 million and a revolving working-capital
facility for LE 300 million.
Mobinil Loses its EDGE
The National Telecommunication Regulatory Authority reports
it has ordered Mobinil to cease its EDGE service, which
allows mobile users to view streaming video. The telecom
regulator considers EDGE a third-generation (3G) technology
that sends non-voice data transmission at three to five
times faster than GPRS, which Mobinil currently operates
using a 2G license.
An official from NTRA gave the mobile operator two weeks to
discontinue EDGE, but Mobinil was not available to comment
on the decision. Mobinil had previously said it believed
EDGE was a 2G technology.
The current price for 3G license for both Mobinil and
Vodafone is $580 million, higher than expected because of
Etisalat’s $2.9 billion offer for its new license. Both
companies refused to buy the 3G license.
Etisalat Prepares for 1Q07 Launch
After months of anticipation, Egypt’s third mobile license
was awarded to the Etisalat-led consortium, which includes
the National Bank of Egypt, the Commercial International
Bank and the Egypt Post. The new operator, to be called Nile
Telecom, will be 10% owned by NBE and 66% by Etisalat.
Information on the division of the remaining shares was
undeclared at press time.
As the consortium paid the LE 16.7 billion license fee and
appointed its CEO, Saleh El-Abdouli, Etisalat revealed plans
to grab 30% of the Egyptian mobile phone market within five
years by offering a combination of new technologies, better
tariffs and a raft of new services.
El-Abdouli’s appointment emerged amid ongoing rumors that
Gamal El-Sadat, CEO of Mashreq Telecom, would be named
chairman of the company.
El-Abdouli has chosen Sweden’s Ericsson and China’s Huawei
to build Egypt’s third mobile network for a total $1.2
billion, preparing Etisalat for operations by the beginning
The first stage of operations will include Cairo,
Alexandria, Sharm El-Sheikh and Hurghada and might be
extended to cover other zones to reach as many people as
El-Abdouli said that the third operator has the right to bid
for an international services portal, which would be a big
boost for the new company. The country’s current operators
have more than 15 million subscribers — a tele-density of
less than 20%, which is expected to increase to 35% in the
next three years.
Etisalat plans to list 30% of Nile Telecom on the CASE in
line with Egyptian financial laws, as well as on the UAE
markets after meeting regulatory requirements, generating
more exposure for the company with the dual listing.
The consortium’s partners will be represented in the board
according to the size of their shares. At press time, the
board was scheduled to hold its first meeting by the end of
The National Telecommunications Company revealed that
Menatel and EgyNet investors have agreed to merge the two
companies to expand the scale of their operations in the
Menatel operates payphones and EgyNet builds digital
The financial weekly Al-Mal indicated that the merger comes
in preparation for the upcoming international
telecommunications license that the National
Telecommunication Regulatory Authority will soon offer to
The National Bank of Egypt and NTC each hold a 36% stake in
Menatel, with 15% held by Edcom — a telecom network
equipment provider — and 4% by small investors. EgyNet
investors include the NBE, US-based Quantum Fund, Commercial
International Investment Company and the National Company
for Investment and Development, to name a few.
Raya Does Oracle Project for OCI
Orascom Construction Industries (bt100 number 2), one of the
world’s top 100 construction companies and a leading global
cement producer, has contracted Raya Holding’s (bt100 number
17) IT subsidiary, Oratech, to implement Oracle HRMS
OCI has undertaken massive expansion with new investments in
the UAE, Algeria, Northern Iraq, Pakistan, Turkey, Nigeria,
and Spain, which have created a 30-million-ton increase in
annual production capacity, necessitating advanced
data-handling systems such as the Oracle HRMS, company
Raya’s Oratech will implement I-recruitment, a self-service
interface that acts as human resources intelligence to
manage all aspects of the hiring process. These applications
will be extended to learning management and time and labor
WD Opens Service Center in Egypt
Western Digital opened a new service center in Egypt to
cater to customers in North Africa.
WD is a leading data-storage and hard-disk maker, supplying
both PCs and gaming consoles. Its Egypt-based service center
will receive malfunctioning drives and send them to the
distributors, who in turn will get credit or replacement.
Recognizing the importance of the North African markets and
identifying Egypt as the regional technology hub brought WD
to set up its regional service center in the country,
offering the best value proposition in terms of after-sales
service. The Egypt-based center complements another in
Dubai’s Jebel Ali, with estimated turnaround time for
product replacement of less than a week.
The new center will particularly benefit Egyptian customers
with data-sensitive applications, as malfunctioning drives
will not need to be shipped out of the country.
LinkdotNet Ushers in Online Gaming
LinkdotNet, Orascom Telecom’s, (bt100 number 1) IT service
and solutions provider in Egypt and the Middle East,
finalized a partnership agreement last month with Boomtown,
a leading developer and online game provider.
The service — available to LinkdotNet’s ADSL subscribers —
will provide news of active, multiplayer online games such
as Counter Strike, Medal of Honor: Allied Assault and
Boomtown services in Scandinavia are provided through
internet café franchises as well as a website portal.
Boomtown CEO for the Middle East and Africa Ashraf Iskandar
says 43% of all internet-connected households in Western
Europe play online games at least once a week, and says no
less is expected for the Middle East.
ARINC Executes Terminal 3 IT Project
ARINC Incorporated has been selected to provide advanced
passenger check-in systems and related technologies for the
new Cairo International Airport Terminal 3.
The Cairo Airport Company has launched a $400-million
project which includes construction of Terminal 3 and other
improvements, partially financed by the World Bank.
ARINC will provide CAC with $22 million worth of design,
project management and installation of 14 mission-critical
airport IT systems, from passenger check-ins and displays to
biometric gates and ramp control for the terminal scheduled
to open in 2008.
The project will feature the first context-aware platform
for airport ramp management in the world, automatically
switching IT applications according to user profiles, the
first common use self-service installation in the Middle
East to speed passengers through check-in, and the first
custom Biometric Immigration Gate system in Egypt. Biometric
systems measure an individual’s unique characteristics, such
as fingerprints or retinas, and provide for streamlined
emigration and immigration control.
El-Hanash Debacle Continues
Minister of Investment Mahmoud Mohieldin said last month
that plans to sell Omar Effendi, the largest state-owned
retailer, to Anwal would continue despite the recent debacle
caused by Egyptian-born, Saudi Arabia-based investor Saeed
The strangest chapter yet in the convoluted, decade-old
privatization process unfolded during the first weekend of
September as the Holding Company for Trade and ministerial
officials waited for El-Hanash to send in a $40 million
letter of credit or meet with officials at the Holding
Company headquarters in Cairo. El-Hanash failed to appear.
After having sent in a LE 2 billion offer for Omar Effendi —
double the LE 1 billion offer by Saudi Arabia-based Anwal —
El-Hanash asked to pay for Omar Effendi in installments with
a LE 50 million down payment, with the remainder to be paid
over two years.
Accusations had been made against Anwal that it had employed
El-Hanash to top their offer with a bogus proposition and
then withdraw, making Anwal’s offer seem more attractive.
Anwal’s Cairo representative, Magdy Tolba denied any of this
At press time, the Ministry of Investment released a
statement announcing that the deal with Anwal would go
China’s Citic to Build Smelter in Egypt
Citic Group, China’s biggest state-run company, plans to
build an $800 million (LE 4.6 billion) aluminum smelter in
Egypt. The smelter will be built by a consortium in which
Citic will hold an 85% stake, with the balance held by a
group of Egyptian banks. Citic was established in 1979 and
currently owns 44 subsidiaries operating in various
With China recording 11.3% growth in 2Q06, the country aims
to tap into more commodity supplies overseas to feed its
booming economy, especially as its demand for aluminum is
estimated to grow almost 20% per annum through 2010.
Initial investments for the smelter amount to $300-350
million (LE 1.7-2 billion) and will reach full capacity of
270,000 tons of aluminum bars per year in five years. It is
not clear yet how much will be exported to China and how
much exported to global markets, but sources revealed that
the plant will be powered by natural gas, thereby cutting
The deal was announced at the end of Minister of Trade and
Industry Rachid Mohamed Rachid’s first official visit to
China, during which he declared China was on its way to
becoming Egypt’s top trade partner. (See related story page
Ataqa Grabs Suez Steel
Misr National Steel (Ataqa) won the bid for the 82.13%
public stake in Suez Steel with an offer of LE 246.5 per
share for a total of LE 1.1 billion.
The public stake is 78.40% held by Banque du Caire and 3.73%
by Misr Insurance. Ataqa will have to also buy the remaining
17.87% private stake for the same price. An offer by
Al-Tuwairqi group missed Ataqa’s by LE 1 per share.
Ataqa will pay LE 300 million of the total deal value to
settle debts owed by Suez Steel to Banque du Caire. The
remaining LE 500 million in debt will be repaid in
Suez Steel was established in 1997 with an authorized
capital of LE 600 million with a total 1.36 million shares
worth LE 100 each and a paid-in capital worth LE 136.5
million. Industry sources expect Ataqa to invest $100-150
million to set up a billet (raw material for re-rolling
steel) unit at Suez Steel — a 600,000-ton billet company
situated five kilometers south of Suez.
Five contenders vied for the stake, including Amwal
Al-Khaleej Commercial Investment Company, Rajhi Steel and
the Essar Group.
Amwal Earmarks Funds for Acquisitions
Amwal Arab Holding Company has set aside LE 600 million to
acquire a number of companies, including 100% of Nile Modern
Cotton Company at LE 345 per share, AAHC CEO Hany Alama
announced last month.
AAHC is 43% held by Arabia Cotton Ginning Company (bt100
number 75), 43% by Amwal Al-Khaleej, 1.5% by Arab Polvara
Spinning and Weaving (bt100 number 58) and 2% by the
Agricultural Cooperative for Land Reform and Development.
Individuals hold the remaining 10.5%.
AAHC had injected LE 50 million into the subsidiary Egyptian
Company for Spinning and Weaving to raise its capital to LE
100 million as a first step, and it will also inject another
LE 60 million to further increase capital to facilitate the
installation of new machines, raising the number from 48,000
The deal, worth LE 248 million, will result in profits of LE
105 million for Arabia Cotton Ginning Company. AAHC will
also buy 50% of the Egyptian Company for Spinning and
Weaving, which started production in March 2006.
(For more on the Egyptian textile industry, including the
first news of the Amwal deal, see our August 2006 story
“Spinnin’ ‘n Weaving.”)
Rashpetco Receives BG Innovation Award
Rashid Petroleum Company was awarded BG Group’s Chief
Executive Innovation Award for General Technology
Applications for 2006.
Rashpetco, established in 1997, conducts development and
exploration operations and produces gas and condensates on
behalf of Rosetta concession holders.
The company — 20% held by BG International Limited, 20% by
Shell Egypt and Shell Austria, 10% by Edison Gas and 50% by
the Egyptian General Petroleum Company — initially produced
around 100 million standard cubic feet of gas per day.
Rashpetco won the General Technology Application award for
the success of its ‘From Toxic Waste to a Safe Commodity’
project. This project overcame the environmental and
operational challenges posed by a hazardous salt-waste
by-product from the Burullus gas processing plant,
incinerating the waste in the high-temperature cement kilns
of the Egyptian Cement Company, a process that has since
been approved by the Egyptian Environmental Affairs
TRAVCO Partners With ADNH
Travco, with 10% market share of Egypt’s inbound travel
market, is expanding its regional presence through its Dubai
office and branch offices in Oman and Abu Dhabi. It has
partnered with Abu Dhabi National Hotels Company to create a
new tourism investment company focused on the UAE market.
At press time, Travco and ADNH had not announced the name
for the new company.
Travco has launched its first resort in Dubai, the
$44-million Iberotel Royal Miramar Fujairah Hotel, with
plans for a $154-million expansion to begin in 2007. It also
has plans to build four new hotels in cooperation with the
government of Oman, starting with a $55-million project in
Closer to home, Travco has launched a new hospitality brand
under the name Jaz, with a brand’s portfolio to eventually
cover resorts, hotels and cruises. The first Jaz resort, Jaz
Mirabel Beach in Nabq Bay, Sharm El-Sheikh, is scheduled to
open its doors in October. Travco will re-brand several of
its Sol Y Mar resorts under the Jaz name, the first being
the Sol y Mar Makadi Star in Makadi City, which will be
called the Jaz Makadi Star. The Jaz Almaza in Marsa Matrouh,
a newly built property, is set to open in the coming months.
Travco has also signed an agreement making it the official
Egypt partner of Dutch-owned BCD Travel, the third-largest
travel management company worldwide with operations in 96
countries. Travco hopes to benefit from BCD’s technological
expertise, particularly its integrated database services
available throughout their coverage area, which allow their
clients to track all the elements of a traveler’s trips and
Emaar Unveils Marassi Plans
After winning the bid for the 6.2-million-square-meter Sidi
Abdel Rahman tract in July for a total LE 1.04 billion,
Emaar Egypt unveiled plans for the development of its North
Coast resort, Marassi.
LE 9.9 billion mixed-use project brings Emaar Egypt’s total
projected investments in Uptown Cairo and Marassi to LE 33.6
billion. Marassi will stretch across seven kilometers of
beachfront in Sidi Abdel Rahman on the North Coast. The
resort is scheduled to be completed within five and a half
years of the company receiving the land and will offer up to
3,000 hotel rooms, a marina, golf course, hospital,
healthcare facilities and total township development.
Emaar is also responsible for other mixed-use community
projects including Cairo Heights, Uptown Cairo, Smart
Village and Bibliotheca Alexandria. Construction has already
commenced on the LE 22 billion Uptown Cairo residential
compound in Moqattam.
On September 19, Telecom Egypt’s (bt100 number 3) Investment
Committee approved a tender offer to acquire up to 24.4% of Vodafone
Egypt (bt100 number 5) at a 19% premium (LE 16 above the previous
day’s closing price of LE 84).
TE already holds a 25.5% stake in the local GSM network operator and
is the second largest shareholder after Vodafone Egypt’s parent
company Vodafone Plc (50.1%). The stake TE is eyeing is held by
Mohammed Nosseir’s Alkan (5%) and Banque du Caire (3.4%), with the
balance being in free float on the Cairo and Alexandria Stock
If the deal goes through, it could mean the de-listing of Vodafone
Egypt from the CASE.
The offer of LE 100 per share raised discontented responses from
international institutional investors, who considered the premium
relatively low in light of the company’s inherent value and future
“TE can afford to up the price if it really wants the stake,” says
Angus Blair of Beltone Financial. “It’s a state-run company with a
good cash flow. It might not want to raise the price, but it could.”
Beltone Financial recently reported that it plans to upgrade its
outlook on Vodafone and downgrade Mobinil (bt100 number 6) in light
of Vodafone’s assertive management and new strategy of expanding its
operations beyond the mobile market. Vodafone recently expanded its
telecommunications service platform with its LE 104 million
acquisition of 51% of Raya Telecom (see related story page 36).
Vodafone’s plans to expand included bidding for an international
gateway license, one of the various licenses the National
Telecommunication Regulatory Authority and the Ministry of
Communication and Information Technology plan to offer in an attempt
to further liberalize the telecom market. Licenses coming up for
sale also include three WiMax permit.
“Unlike Gulf markets, where there are massive restrictions on the
telecom sector, Egypt can flourish because it isn’t that strict and
there is room for greater investments and ultimately greater usage,”
As the sector is further liberalized, mergers are a more common
means tapping into the lucrative future of the sector. Egypt has
several companies serving the market, few of which were of
considerable value on their own, preventing them from venturing into
new operations and bidding for licenses such as the upcoming WiMax
and international gateway alone.
TE had bid for Egypt’s third mobile license in partnership with
Mobile Italia, ultimately losing to Etisalat. When the winner was
announced, TE pledged to its investors that it would expand in
fixed-line systems while exploring new revenue generation streams.