Telecom Egypt IPO hits the road

29 September 2000

Plans to launch an initial public offering (IPO) of a 10-20 per cent stake in Telecom Egypt on the local and London stock exchanges were formally announced on 19 September. The government is aiming to raise at least $1,000 million from the IPO, making it the largest deal of its kind in Egypt so far.

Telecom Egypt chairman Akil Bashir said: 'Our IPO is the next vital step in the rapid development of Telecom Egypt. It will help enable us to take advantage of the commercial opportunities presented by our fastgrowing market and enhance our capacity to meet international standards in management and corporate governance.'

Pre-marketing for the IPO has already started in the Gulf, and the company says that subject to market conditions, the actual offering is expected to take place by the end of 2000.

Analysts say the success of the deal will depend to a large extent on the impression Telecom Egypt's marketing team make on international investment houses during the roadshow. It will provide a first opportunity for investors to look in detail at Telecom Egypt's accounts, and they will also have the chance to clarify key issues relating to the company's plans to launch a global system for mobiles (GSM) service at the end of 2002. In its official statement, Telecom Egypt says it 'expects to resume offering mobile telephony services in December 2002 as the third mobile operator in Egypt'. Prospective investors will be keen to learn whether Telecom Egypt will be required to pay a fee for starting up a new GSM network, analysts say.

The Telecom Egypt IPO Global co-ordinators ABN AMRO Rothschild and Commercial International Bank (Egypt - CIB). ABN AMRO will act as bookrunner for the international tranche, and CIB as the bookrunner for the domestic private placement and IPO.

Listing Shares will be listed on the Cairo & Alexandria Stock Exchanges and, as global depositary receipts (GDRs), on the London Stock Exchange.

Financial information The company made total revenues of about £E 5,700 million ($1,580 million) in the year to 30 June 2000, compared with £E 4,400 million ($1,200 million) the previous financial year. Net profits in 1999/2000 were £E 1,600 million ($440 million). No profit figure has been given for 1998/99.

Services Telecom Egypt is the sole provider of fixed telephone services, with 5.5 million access lines. The company also owns 20 per cent of data services network provider Egynet and a 20 per cent stake in Nile Online, which is setting up a fibre optic digital network for highspeed data transmission. The company is seeking to acquire or develop an internet service provider (ISP). Its monopoly on fixed line services is expected to last until the end of 2005. It plans to roll out more than 1 million access lines a year.

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