One day in the red, the following in the black -- this is how the market has been ending its trading sessions in the recent period. From breaking a strong point of resistance, to retreating to a previous point, the EGX30 is zigzagging back and forth. However, an optimistic sentiment is colouring the market, thanks to positive developments with its bellwether, Orascom Telecom. ORASCOM TELECOM HOLDING (OTH): After almost 10 days of declining to comment on press reports regarding negotiations to merge with or sell some of its units to South African telecommunication, OTH issued a statement yesterday saying that it is not aware that its parent company, Weather Investments, is in discussions with MTN Group which may or may not lead to the acquisition of control of Orascom and/or its businesses by MTN. The trading on both the companies shares and GDRs was resumed yesterday after the release of the statement. Trading in shares of OTH was suspended on Monday and Tuesday while trading on the global depository receipts listed in London was suspended on Friday, Monday and Tuesday. Speculations during the past week pointed to a high possibility of OTH's selling its Algerian unit Djezzy to the south African group, a move that a senior official in the Algerian government said to Reuters his government would support. Asked if the Algerian government would approve a deal, the source said: "Having the South Africans in the telecoms sector in Algeria instead of the Egyptians is a good solution for us." Analysts also said there is a possibility that the deal might include the sale of Orascom's four sub-Saharan assets, grouped under the Telecel Globe brand. Johannesburg-based MTN is Africa's largest mobile phone operator by subscribers, but it relies on just a handful of markets -- Nigeria, South Africa and Iran -- for the bulk of its revenues. In another OTH related important development, France Telecom (FT), OTH's partner in the ownership of Mobinil, will pay OTH $300 million in a settlement deal over ownership of Mobinil. The OT-FT settlement was reached after years of disputes that reached courts over their stakes in Mobinil that had lasted for years. Orascom and France Telecom have agreed not to transfer any shares between them, and Orascom Telecom will not seek to increase its 20 per cent direct stake in the Egyptian Company for Mobile Services (ECMS), known by its Mobinil brand name. OT has the right according to the deal to sell its shares in Mobinil to France Telecom only for LE221.7 in 2012 and LE248.5 in 2013. Mobinil will also acquire Orascom Internet assets LINKdotNET and Link Egypt for $130 million under the terms of the final deal between the two partners. EFG-HERMES: Syria has given licences for investment banking to a Syrian unit that EFG-Hermes is setting up. The activities covered by the licences are advisory and corporate finance, research, securities brokerage and asset management. "EFG-Hermes is currently establishing EFG-Hermes Syria with a paid-in capital of $5 million in order to begin operations in the Syrian market as soon as possible," an EFG-Hermes statement said. The leading regional investment bank said in March it was opening a Syrian office and launching a $250-$300 million private equity fund to take advantage of recent Syrian liberalisation measures. EFG-Hermes Syria is established in partnership with Syrian businessman Firas Tlass, that will own 30 per cent. RAYA HOLDING: The company intends to establish a high-tech plastic recycling plant on the European model, with estimated investment of LE70 million and returns of about 18 per cent of investment cost. Raya is about to buy a 10,000 square-metre plot in 6 October governorate in order to establish the project, mainly for sanitary use. Some 50 per cent of the project will be self-financed; the rest will be obtained from banks. On a different note, Raya signed a financial lease contract with the real estate developer Palm Hills through which the latter will lease Raya's administrative building in the Smart Village at a total value of LE90 million. THE EGYPTIAN COMPANY FOR MOBILE SERVICES (MOBINIL): The first quarter results of Egypt's largest mobile phone operator came disappointingly far below analyst estimates. The company's net profit came in at LE357 million -- down two per cent from its level a year earlier and 38 per cent lower than its level in the fourth quarter of 2009. Mobinil's total revenue was LE2.55 billion, versus LE2.49 billion in the corresponding quarter of last year. Six analysts polled by Reuters had seen revenue in a range between LE2.63 billion and LE2.93 billion. Their average forecast for net profits was LE518 million, with the lowest estimate at LE409 million. On a positive note, the company said it added 767,000 subscribers in the quarter for a total of 26.12 million by the end of March. On the other hand, average revenue per user (ARPU) fell 18 per cent on a year earlier to LE32 per month. "As expected, 2010 marks reaching a high level of maturity in the Egyptian mobile market," Hassan Kabbani, Mobinil's CEO, said in the earnings release. "The first quarter was affected by the economic slowdown, adverse regulatory conditions and intense competition pressuring down prices," he said. Mobinil has been engaged in a fierce pricing war with Vodafone Egypt and Etisalat since the holy month of Ramadan. On another front, Kabbani was quoted in press reports as saying that operations of LINKdotNET in Pakistan and some Arab countries will be excluded from the acquisition deal whereby Mobinil is buying the Internet service provider from Orascom. The deal will be limited to ADSL and interconnection services. According to Kabbani, Mobinil is to pump new investment into LINKdotNET to fulfil its plan to extend Internet services in the mobile phone service market. Compiled by Sherine Abdel-Razek
