Preparations are underway to sell 20 percent of Egypt Telecom, the government telecommunications monopoly. An international company, KPMG, is currently reviewing Egypt Telecom’s balance sheets, before the stocks are placed on local and international markets next November.
At a news conference on Tuesday, Okeil Beshir, head of Egypt Telecom, said the company made over 1 billion Egyptian Liras (LE) in profits in 1999-2000. Detailed information on the company’s performance will be released in September after KPMG and the central agency for auditing finish their reviews. Beshir said an international company is being used to enhance the trust of foreign investors, who are wary of evaluations by governments.
Beshir said Telecom Egypt would retain its monopoly in providing local and international telephone services for at least the next five years. In the coming stage, the company’s plan includes expansion and development of new services, including Internet-related business.
It now offers ISDN (Integrated Services Digital Network) lines for users to make their telephone lines digital and use the Internet at much higher speeds. For the first time in Egypt, the company has also started offering toll free calls (800 numbers) and services like music or recipes (900 numbers).
Some 96 percent of all existing exchanges have been upgraded to the digital system and Beshir promised to transform the rest of the exchanges by year‘s-end. He said that starting next September there would be a discount on international calls.
Omar Radwan, portfolio manager at EFG Hermes Asset Management, said Telecom Egypt has its strengths and weaknesses. There is undoubted strength in its monopoly, which allows it enormous freedom in the market. However, Radwan believes a big minus is that the company is not providing Internet and mobile telephone services, depriving Telecom Egypt from cultivating a new economy.
Although the company is involved in the hardware of the Internet, Internet Service Providers buy their bandwidths from the cabinet of ministers, which initiated the Internet in Egypt.
Another problem, said Radwan, is that the company has huge receivables, especially from public institutions that fail to pay their bills. Telecom Egypt is currently trying to solve this problem by considering billing individuals on a quarterly basis instead of bi-annually and billing companies monthly.
Radwan also considers 20 percent too big an offering. "The market lost faith in big offerings, because the prices of most big offerings in the past year went down. The timing is bad," he said, but added that the government needs cash to help in the existing liquidity problem.
Also, the government made several promises to sell stocks before the end of the year, so it has no choice but to keep its word.
Radwan praised the current management of Telecom Egypt for the new services it is offering and for staying in touch with the latest technologies. He said he agreed that the presence of KPMG would make the offering better received by international markets. — (Albawaba-MEBG)