Egypt’s benchmark CASE 30 stock index, the EGX 30, gained 2.2% yesterday, primarily on the strength of its telecoms and specifically rumors that a row  between Mobinil shareholders will soon be resolved.  Orascom Telecom (OT) and France Telecom have been engaged in battle over their joint holding in Mobinil–one of three mobile operators in the most populous Arab country–since the two sides went to court in 2007.  OT had previously stated that it considers the deal ordered by an international arbitration court in March to sell its 28.75% stake in Mobinil to France Telecom “null and void” after the French company failed to meet a deadline to transfer certain funds in time.

The telecom sector is of particular interest to investors looking to add Egyptian exposure.  Egypt’s Minister of Investment declared this week that the  sector grew by 14% Y-OY in the third quarter of the current fiscal year, which ended in March. The sector contributed less than 3% to GDP, while the number of internet users increased to 13 million.  And last week Telecom Egypt announced a surprise 72% rise in net profit for the first quarter, a better than expected result that shocked traders.

According to Business Monitor International (BMI), Egypt’s mobile subscriber market grew by 9.6% in the third quarter of 2008.  Including inactive mobile users, which all three of Egypt’s operators are assumed to have, the total Egyptian mobile customers expanded to 42.275m at the end of September 2008–equivalent penetration rate of just over 53%.  Moreover, it envisions a total market of over 59m mobile customers at the end of 2009– equivalent to 74% penetration.

“Prepaid services,” it states, “will continue to drive market growth in the immediate future, and this phenomenon is expected to put downward pressure on operator average-revenue-per-user (ARPU) levels. However, recent developments, including Mobinil’s launch of 3G services in September and Vodafone’s November announcement that it was preparing to launch Apple’s iPhone 3G, should help to boost the market for mobile internet and data services. This in turn will help to stabilise falling ARPU levels.”

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