CAIRO: Investment bank EFG-Hermes raised its long-term fair value estimate for Orascom Telecom (OT) to LE 437 ($76.27) a share because of what it called OT s aggressive growth strategy. EFG-Hermes previously gave the Egypt-based international mobile operator an estimate of LE 306.25 a share. But it said in December this should already be 5 or 6 percent higher because of OT s new strategic alliance with Hutchison Telecom. OT shares were trading at between LE 350 and LE 360 pounds on Thursday morning. In a research note dated Feb. 7 and received on Thursday, the investment bank said OT was seeing very strong subscriber growth, counteracted by continued pressure on margins and ARPUs (average return per user). It said it expected OT to have more than 45 million subscribers at the end of 2006, from a little over 30 million at the end of 2005, but ARPUs would decline by an average of 23 percent during the year. "With declining capex/subscriber and capex/minute, we believe OT can still derive value from aggressive growth, it added. EFG-Hermes calculated a net asset value of LE 380 a share plus a 15 percent holding company premium, giving a long-term fair asset value of LE 437. Although OT s price to earnings ratio is higher than average, the strong interest in the stock from the Gulf means it should be compared with Gulf stocks, it added. Reuters
