By: Heba El-Kordy
Cairo - Mubasher: The challenges facing the telecommunications sector in Egypt have recently increased, along with losing some of its key powers in the Egyptian Exchange (EGX), raising the question of whether investing in the telecom sector will remain attractive in the coming period or not?
Over the past period, the Egyptian bourse has seen a raft of changes in the telecom sector, including the delisting of Orange Egypt for Telecommunication and the change of Orascom Investment Holding (OTMT), in addition to the pressures facing Global Telecom since the beginning of 2018.
The telecom sector index on the EGX has fallen by 39.76% since the beginning of the year.
Challenges
The North African nation's telecom sector has been under pressure since the fourth quarter of 2017, senior telecom analyst at Beltone Financial Ahmed Adel told Mubasher.
Higher costs of services, the introduction of further fees and taxes, and competition between telecom operators are among the headwinds, Adel added.
The value-added tax (VAT) on mobile phone services, as well as fees imposed by the government on selling SIM cards and phone bills, have negatively impacted consumption rates in the past period, he highlighted.
He projected that the negative impact will last in the short- and medium-term on the sector’s performance, consumption rates, and the profitability of mobile operators until the purchasing ability of users is recovered.
Orange Egypt
The Egyptian telecom sector was not remarkably affected after writing off Orange Egypt’s shares on the EGX as free-float trading on the stock was declining since shareholders exited it in 2012, Adel said.
In July, the listing committee at the EGX called the main shareholder in Orange Egypt to write-off the company’s shares on the Egyptian bourse.
OTMT
The analyst highlighted that OTMT’s investments in the telecom sector in the past period were limited to North Korea, which refutes claims that its exit from telecom business has adversely impacted the sector.
In June, OTMT announced that its extraordinary general assembly has approved changing the company’s name to be Orascom Investment Holding.
Telecom Egypt
Telecom Egypt is still the optimum choice for investment on the EGX's telecom sector, especially after it has extended business to include mobile phone services in the past period, Adel stressed.
He also noted that Global Telecom has faced many pressures since the beginning of the year on the back of the unclear landscape regarding the acquisition offer presented by VEON.
The telecom sector has been suffering for more than three years due to thin liquidity, the absence of market-boosting catalysts, and weak trading volumes on the EGX, which will pose a challenge to lure further offerings, such as Etisalat Misr, he emphasised.
Translated by: Mai Ezz El-Din
