Egypt Shares Rise Most Since October 2008 on Orascom, Mobinil
Share Business ExchangeTwitterFacebook| Email | Print | A A A
By Alaa Shahine
Dec. 13 (Bloomberg) -- Egyptian stocks surged the most in 14 months after France Telecom SA got regulatory approval to buy shares it doesn’t already own in the Egyptian Co. for Mobile Services and Orascom Telecom Holding SAE planned a share sale.
The EGX30 index rose 6.3 percent, the most since October 2008, to 6,580.44 at the close in Cairo. Egyptian Co. jumped 16 percent. Orascom Telecom, which owns a stake in Egyptian Co., also gained 16 percent, the most since May 2003, according to Bloomberg data.
“The market is in a frenzy due to the France Telecom offer,” Teymour El-Derini, head of Middle East and North Africa sales at Cairo-based Naeem Brokerage, wrote in an e-mail. Egypt’s Financial Supervisory Authority had rejected three previous bids from the French company.
Egyptian Co., the country’s biggest mobile-phone company, had been at the center of an ownership dispute between France Telecom and Orascom Telecom, the largest mobile-phone operator in the Middle East. France Telecom offered to pay 245 Egyptian pounds ($44.70) a share for Egypt Co., the regulator said Dec. 10 on its Web site.
Egyptian Co. surged the most since May 31 to 237.96 pounds. Orascom Telecom climbed to 31.39 pounds. France Telecom shares gained 0.4 percent to 17.25 euros on Dec. 11.
Share Sale
Orascom Telecom plans to raise $800 million in a rights share offer after a tax dispute with Algerian authorities. The size of the issue is as much as 5 billion pounds ($914 million) and the company plans to offer shareholders new shares for every existing share at 1 pound a share. The Cairo-based company will seek shareholders’ approval Dec. 27 for the stock sale.
Algeria’s tax authority ordered Orascom last month to pay a $596.6 million penalty. The company said the fine was based on the “unfounded and unacceptable allegation” that it didn’t keep proper accounts.
France Telecom won an arbitration ruling this year requiring Orascom Telecom to sell its stake in Mobinil Telecom, a holding company that owns 51 percent of Egyptian Co., for the equivalent of 273 Egyptian pounds a share. France Telecom hadn’t moved forward with the purchase because the regulator said it must also bid for the rest of Egyptian Co. shares at the price of the arbitration ruling or justify offering a lower price.
‘Hype’
The regulator said France Telecom’s justification of the price rested on “liquidity available at Mobinil Telecom” and the evaluation of financial resources for Mobinil Telecom’s shareholders as a result of management services for which Egyptian Co. “is obliged to pay 1.5 percent of its revenue.”
“There is a lot of uncertainty on what Orascom Telecom has to do regarding this offer, which is creating a lot of hype,” El-Derini of Naeem Brokerage said.
Orascom Telecom said today the Paris-based company hasn’t moved ahead with the purchase in the time set by the arbitration court and, therefore, was in violation of the ruling. “We don’t agree to this offer,” Chief Executive Officer Khaled Bichara said in an interview with Dubai-based Al-Arabiya television.
To contact the reporter on this story: Alaa Shahine in Cairo at asalha@bloomberg.net
Last Updated: December 13, 2009 08:06 EST
