Downgrade to Neutral on challenges in Algeria
Cut target price by 21% on Algeria’s challenging recovery. We reduce our rating on a revised TP, but also after a strong share price rally y-t-d. Djezzy’s value was cut by 38% to reflect a 20% lower EBITDA in 2016-20e. Its recovery depends on strategic remedies to its pricing and commercial strategy. The churn rate shot to 10% in 2Q16 from 6% (pre FNI deal) and ARPU fell 12% y-o-y. Algeria is facing a pricing disequilibrium that is unconducive to growth and data monetisation, in our view. Management intends to revisit pricing and distributor commissions, which we expect to weigh on margins in the short-term.
Global Telecom Holding, through its subsidiaries, is a mobile telecommunications company operating in markets in the Middle East, Africa, and Asia. As of Dec 31 2014, Co. had a total population under license of approximately 415 million. Co. operates mobile networks in Algeria (OTA), Pakistan (Mobilink), and Bangladesh (Banglalink). In addition Co. has an indirect equity ownership in Telecel Zimbabwe through its subsidiary Telecel Globe.
CI Capital is a diversified financial services group and Egypt’s leading provider of leasing, microfinance, and investment banking products and services.
Through its headquarters in Cairo and presence in New York and Dubai, CI Capital offers a wide range of financial solutions to a diversified client base that include global and regional institutions and family offices, large corporates, SMEs, and high net worth and individual investors.
CI Capital leverages its full-fledged investment banking platform to provide market leading capital raising and M&A advisory, asset management, securities brokerage, custody and research. Through its subsidiary Corplease, CI Capital offers comprehensive leasing solutions, including finance and operating leases, and sale and leaseback, serving a wide range of corporate clients and SMEs. In addition, CI Capital offers microfinance lending through Egypt’s first licensed MFI, Reefy.
The Group has over 1,700 employees, led by a team of professionals who are among the most experienced in the industry, with complementary backgrounds and skill sets and a deep understanding of local market dynamics.
CI Capital has been recognized as the “Best Investment Bank in Egypt” by EMEA Finance for four years running from 2013-2016, and by Global Finance in 2014 and 2015.
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