Tension overshadowed the market in the week ending 1 February, amid worries of rising inflation rates, and in anticipation of the end of week decision by the Central Bank of Egypt (CBE) on interest rates. Remarks by Prime Minister Ahmed Nazif during the World Economic Forum (WEF) meetings in Davos a week earlier stirred most of the worries. Nazif had stressed the government's persistence on spurring GDP growth, no matter what impact this might have on prices. However, as the week proceeded and the US Federal Reserve decided to keep interest rates at their current level of 5.25 per cent, fears subsided since the local monetary authority usually follows the US lead in interest rate policy. Meanwhile, CBE did the same and kept its overnight deposit and lending rates at 8.75 and 10.75 per cent, respectively. The week also witnessed the introduction of changes in the market's main index CASE30, which tracks the performance of the most actively traded companies. Six of the 30 companies were replaced by other more active companies. The end of the week saw a revival that was mainly fed by a buoyant performance by the market's bellwether Orascom Telecom Holding (OTH). In another development, the government amended its securitisation rules to make it easier for companies to raise short-term debt. The amendments include lowering the minimum required capital for companies pursuing this activity and opening it to non-banking institutions ORASCOM TELECOM HOLDING (OTH) increased the size of its planned seven-year bond offering from $500 million to $750 million, in response to the high demand on the issue. Increased demand will also means that OTH will be able to borrow at better interest rates, saving itself at least 25 basis points. The coupon of the bond is expected to range between 7.875 per cent and eight per cent. The lead managers for the offering are Credit Suisse and Citigroup, and proceeds will be used to repurchase OTH shares and capital expenditure. OTH may use proceeds from bond issue to help finance the purchase of Saudi Arabia's third mobile licence, in case it wins the bid. Otherwise, it would fund other licences in targeted markets. Part of the proceeds might be used to finance a proposed share buy-back programme to buy five per cent of its total shares. AL-EZZ STEEL REBARS is planning to float 50 million shares in London Stock Exchange in the form of Global Depository Receipts (GDRs). The offering, worth $50 million, will be through a capital increase that will result in reducing Chairman Ahmed Ezz's stake from 76.9 per cent to 60 per cent. The capital increase will fund a new direct reduced iron plant and a new steel melting unit. Citigroup and EFG-Hermes are to lead the issue while HSBC will be the co-leader. VODAFONE EGYPT (VFE), which was granted the licence to launch 3G services two weeks ago, announced its financial results for the first nine month of fiscal year 2005/2006, posting a 59 per cent increase in net income to reach LE2 billion. The gain is mainly fed by a 42.1 per cent growth in the number of its subscribers, to reach 7.9 million, compared to the corresponding period the previous year. According to an HC Securities note, the subscriber growth was mainly stimulated by newly added promotional prepaid products. These were meant to capture a market share before the entrance of the third mobile operator in the third quarter of 2007. Revenues of Raya Telecom, 51 per cent owned by VFE since 2006, contributed to the increase in revenues by LE21 million. VFE has the option to buy a further 45.1 per cent of Raya Telecom within two years. Ericsson has begun installing equipment to build the 3G network for VFE in several locations, including Cairo, Alexandria, Hurghada and Sharm El-Sheikh. Ericsson won the contract last year after bidding against four other suppliers. In another development, the National Telecommunication Regulatory Authority (NTRA) gave Vodafone and Etisalat licence to use technology 3.5G without paying additional fees. Meanwhile, NTRA may allow MobiNil to use EDGE technology 2.75G under a new licence costing less than the 3G permit. MobiNil Chairman Naguib Sawiris insists that EDGE technology is part of 2G services and does not need a 3G licence. ORASCOM HOTELS AND DEVELOPMENT (OHD) signed a partnership agreement with the Moroccan company CDG Development to develop a tourist resort in the Tan Tan area on Morocco's southern Atlantic Coast. The project will be built on 1,500 hectares, and the first phase includes the completion of 5,000 hotel beds and 2,000 residential units. EGYPTIAN FINANCIAL & INDUSTRIAL COMPANY (EFIC)'s board of directors approved a 4:1 stock split, bringing down the stock's par value from LE20 to LE5. The share split will increase outstanding shares from 12.99 million to 51.98 million. The decision coincides with the company's announcement of a seven per cent increase in EFIC's net profits to LE96.7 million for the full year 2006. Compiled by Sherine Abdel-Razek
