Orascom brings on new revenue streams

22 September 2000
Telecoms

Cairo-based Orascom Telecom is starting to generate significant earnings from its new activities in Africa and Pakistan, half-year results issued on 11 September show. The announcement of the results came amid reports of strong interest from international operators in taking a strategic stake in the firm, which launched an initial public offering (IPO) of its shares in July.

The company posted net earnings of £E 66 million ($19.3 million) for the first six months of 2000 compared with £E 38 million ($11.1 million) for the whole 1999 financial year. Total revenues were £E 881 million ($250 million) in the six-month period, compared with £E 1,051 million ($298 million) in the full year of 1999.

The company notes that the contribution of Egyptian Company for Mobile Services (MobiNil) to revenues dropped to 40 per cent from 51 per cent in 1999, and that of Jordan Mobile Telephone Services Company (Fastlink) fell to 23 per cent from 32.5 per cent. This reflects the addition of African operator Telecel and Pakistan's Mobilink to the portfolio since the start of 2000. Orascom Telecom is now rapidly expanding its African operations, with launches in Gabon and Chad in the first week of September alone.

The release of the half-year results was preceded by an announcement by Orascom Telecom confirming rumours circulating in the market about the interest of strategic investors in taking a stake in the company, but saying that no firm discussions have taken place on this matter.

The talk of strategic investors provoked an immediate rally of Orascom Telecom's share price, which has languished since the IPO.

However, the price dropped once it became clear that any strategic investment is unlikely in the short term.

'Big mobile phone operators are very interested in Orascom Telecom because of its penetration of several new and promising markets, ' says a London-based analyst.

'However, I would doubt very much whether Orascom Telecom would be interested in any sort of merger or joint venture deal until its share price starts to move up.'

Analysts say the company is undervalued.

It closed on 13 September at £E 53.80 ($15.20).

EFG-Hermes, the global co-ordinator for the IPO, says the stock deserves a price of £E 84 ($23.80).

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