Amr El Alfy, Head of the Research Unit of Prime Investment Bank, said that the execution price of the Telecom Egypt deal, which came at EGP 23.11, is less than the fair value of the company.
Al-Alfy said in statements to Amwal Al-Ghad that the proceeds of the deal, which amounts to about 3.95 billion pounds, are not large enough to contribute to financing Egypt’s financing gap.
He explained that the deal is an affirmation of the Egyptian government’s seriousness in exiting government companies even if these companies are not included in the list of offered companies, pointing out that the impact of selling the share on the minority shareholders in the stock exchange is limited.
It is noteworthy that “Amwal Al-Ghad” learned, according to sources, that a share of Telecom Egypt’s shares was sold, according to the Book Building mechanism, at a value of 3.95 billion pounds.
She stated that the selling price of the share was about 23.11 pounds, for about 170 million shares, at a value of 3.9 billion pounds, indicating that local dealers controlled the largest percentage of the sale process, and the Wei Board of Directors was authorized last Thursday to take all measures to implement the deal.-
El Alfy said that the Research Department of Prime Investment Bank set the target price for Telecom Egypt’s stock at EGP 46.7; To join the list of stocks nominated for the rise in the Egyptian Stock Exchange during the current year 2023, with a rise of 91%.-
He stated that the main incentives are due to the amendment of the shareholders’ agreement with the Vodafone Group (which has now been replaced by Vodafone), after which Telecom Egypt has a greater vision regarding the annual cash profits that will be distributed from Vodafone (where the Vodafone dividend will be 60% of the annual cash flow). free for Vodafone)
The head of the research unit considered that the main risks are due to the environment of high interest rates that will affect its profits in light of the financial leverage, of which 90% is in US dollars. Likewise, the strength of the US dollar means greater currency valuation losses in the income statement of Telecom Egypt, which reduces its profits. ; Any weakness in the growth rate of Telecom Egypt’s revenues will negatively affect operating cash flows.
We recorded a net profit in 2022 after taxes amounting to 10.1 billion pounds, achieving a growth of 31% compared to the previous year, achieving a margin of 23%, due to some exceptional items such as currency differences and the aforementioned provisions, and the decrease in investment revenues from Vodafone Egypt, which is mainly due to the depreciation of the currency.
The total consolidated revenues amounted to 44.3 billion pounds, achieving a growth of 19% compared to the previous year, driven by an increase in the revenues of retail business units and wholesale business units (a growth rate of
21% and 17%, respectively).