In new report Lehman affirms MobiNil as a Strong Buy

In its new global equity research report, Lehman Brothers, an international US investment bank has expanded its coverage of equity markets in the African continent. The new coverage focuses on African mobile phone operators, which includes Egypt’s MobiNil and Orascom Telecom.

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By  Massoud Derhally Published  October 4, 2001

In its new global equity research report, Lehman Brothers, an international US investment bank has expanded its coverage of equity markets in the African continent. The new coverage focuses on African mobile phone operators, which includes Egypt’s MobiNil and Orascom Telecom.

In its new report, Lehman Brothers gave MobiNil, a 1-Strong Buy, based on the company’s ability to deliver strong margins, which the investment bank attributes to MobiNil’s increasing scale and dominance of the corporate sector. David Hayes, equity analyst at the investment bank and the author of the report told ITP.net, “We remain confident that margins will be maintained above the 40% level in a duopoly that is protected until late 2002. We are initiating coverage with a 1-Strong Buy rating.”

According to the report, MobiNil, has 1.7 million subscribers and commands 55% of the Egyptian market. “This advantage has arisen partly from the development of MobiNil from the old analogue network original operated by Egypt Telecom. This network was taken over by MobiNil, acquiring 80,000 subscribers in the middle of 1998,” explained Hayes.

Within the same report, the US investment bank gave Orascom Telecom, which has a 31% stake in MobiNil and has investments in Algeria, Asia and the rest of the Middle East. While Lehman says Orascom is enjoying healthy subscriber growth it pointed out that the company’s $700 million investment in Algeria for the GSM license has put pressure on the company’s holdings forcing it to exit some of its investments sooner than expected. “EBITDA margins are erratic across the group. Algeria will dilute EBITDA for the first two years, but we assume a rapid increase in EBITDA in this new business, assuming that it mirrors the short-term profitability performance at MobiNil,” said Hayes.

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