Underweight on the 4G venture’s sector dynamics
Cut TP by 19%, downgrade to UW from OW. Telecom Egypt (TE) shares rallied 35% y-t-d on enhanced profitability of the fixed line segment, which we include by doubling its value to EGP4.30/share. This is offset by the 4G venture (negative NPV of EGP3.3/share) and Egypt’s recent interest rate hike. By global standards, the former’s price is not expensive, but sector dynamics do not justify its cost due to: i) data ARPU of cUSD1, ii) EGP depreciation during a higher capex phase for 4G deployment, and iii) TE’s fourth player position offering voice services for a slim margin.
Telecom Egypt is a telecommunications provider in Egypt and is engaged in the provision of fixed-line services in the Middle East. Co. offers a fixed line and retail telecommunications services and provides wholesale telecommunications services. Co. provides retail telecommunication services including access, local, long distance and international voice, internet and data, and other services. Co. also provides wholesale services including broadband capacity leasing to ISPs, and national and international interconnection services. Co.'s internet and data services include the provision of internet broadband access data transmission services and leased lines.
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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