Telecom market holds its breath

By Niveen Wahish
After two years of battling with MobiNil to establish a strong subscriber base, Click GSM is set to take its fight onto the stock exchange floor. The company, now renamed Vodafone-Egypt Telecommunications, but marketed as Click-Vodafone, is scheduled to float a portion of its 120,000 shares some time during the second half of this year.
Mohamed El-Hamamsi, executive president of the company, has been quoted as saying that both the date of the flotation and the share price will be made public following the announcement of the company's second year results in March. And according to Lamia' Kamel, public relations specialist at Click-Vodafone, the company is already deciding on investment banks to advise on the timing of the IPO. Goldman Sachs, Merrill Lynch, Morgan Stanley Dean Witter and Credit Suisse First Boston are among the candidates vying to arrange the offering.
Although the number of shares to be offered has not been specified by the company, analysts expect 10 per cent to be floated in the form of GDRs and five per cent offered for public subscription on the Egyptian stock exchange.
The company, currently capitalised at LE1.2 billion and with 1.2 million subscribers, is 60 per cent owned by Vodafone International. Other major holders of shares include Alkan Establishment and EFG-Hermes, each with a 10 per cent stake, and Banque du Caire, with 15 per cent.
Quite whether the time is ripe for floating telecommunications shares, though, remains an open question. Last November Telecom Egypt (TE) delayed the floatation of 20 per cent of its shares indefinitely, or "until the markets improve," as Akil Beshir, TE chairman said. Vodafone-Egypt faces the same dilemma. According to Ahmed Gad, research analyst at the investment bank and brokerage firm, EFG-Hermes, the floatation decision depends on market conditions at the targeted time and on the share values of comparable mobile operators. Though the shares of telecommunication companies worldwide have recovered slightly following a 40 per cent drop last year, "nobody knows which way they'll head next," says Gad.
Until Vodafone-Egypt's management finally make up their minds about the offering, speculation is likely to continue, with some investors liquidating current holdings in order to secure the necessary resources to buy when the time comes and thereby contributing to a general market slowdown.
The same scenario, after all, took place when investors were awaiting the TE floatation that never came.
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