Orascom Telecom offers to buy back 10.3 pct of shares
Friday, April 18, 2008 7:04CAIRO (Reuters) - Egypt-based mobile phone operator Orascom Telecom (OT) said on Thursday it was offering to buy back 10.3 percent of its own shares at 83 Egyptian pounds a share.
The offer also applies to the company’s London-based GDRs, for which the price is equivalent to $76.50 at the current exchange rate, it said. Each GDR is equivalent to five ordinary shares.
OT shares jumped 8.7 percent to a high of 81.4 pounds a share in early trading on the Egyptian stock exchange. They then slipped back to about 79.50 pounds, up 6.2 percent.
OT said it was offering the buyback because it had a large cash surplus and could not find attractive alternative investments. “The company feels that buying its own shares is the best way to use such amounts,” it added.
The offer is for up to 106 million shares, giving the buyback transactions a potential cumulative value of 8.798 billion Egyptian pounds.
The offer will expire on May 14 at 5 p.m. New York time (2100 GMT) but could be extended, the company said.
Amr el-Alfy, head of research at CIBC brokerage, said he thought the stock was undervalued, so a buyback was timely.
CIBC gives the stock a fair value of 94 pounds a share before the buyback, excluding the company’s expansion into North Korea. Taking North Korea operations into account, the price should be up to 100 pounds a share, Alfy added.
In March, OT reported a 180 percent rise in 2007 net income to $2.021 billion, and said subscriber numbers had exceeded 70 million by the end of the year.
The company has operations in Egypt, Algeria, Tunisia, Pakistan, Bangladesh and Zimbabwe. It won a mobile phone licence in North Korea in January and plans to invest $400 million in infrastructure and licence fees there over the next three years.
