Orascom Telecom rings up added value

Despite a rise in its price, Orascom Telecomstill appears to be good value after reporting bumper first-quarter earnings.
The stock climbed 4.1 per cent to 4.54 Egyptian pounds yesterday, one of the largest gainers on the benchmark EGX 30 Index.
Orascom Telecom has extended recent advances made on the back of a sharp jump in first-quarter earnings as it booked large gains from the sale of its Tunisian operations. The company last week reported an impressive net income of US$813 million for the first three months of this year, well above the $49m earned in the same period last year. The shares have risen nearly 9 per cent in the past two trading sessions. The company said its earnings were buoyed by the sale in January of its Tunisian operation, Tunisia Holding and Carthage Consortium, which produced a gain of $754m.
It said its subscriber base in the first quarter rose 16 per cent from the year-earlier period, reaching more than 104 million customers. It is now one of the biggest mobile companies in the Middle East by number of subscribers.
Carola Bardelli, a Deutsche Bank telecoms analyst, raised her rating on the stock to "buy" from "hold" and increased the target price to 4.20 pounds. Although that price is lower than the current price of the stock, Orascom Telecom trades at a 30 per cent discount to other comparable companies in Egypt.
The company "should not treat the assets to be spun off as assets to be disposed", Ms Bardelli said of the company's asset sales. She had forecast a $900m capital gain from the disposal of the Tunisian unit, more than the actual gains. The earnings from the sales would help the company's debt position, she said. A management shake-up is also likely to refresh the company's strategy and its balance sheet, analysts say.
Ahmed Abou Doma was this month appointed as Orascom Telecom's chief executive. He had been the head of the company's Bangladesh operations, the company's third-largest unit by revenue.
fhalime@thenational.ae