A report by an Egyptian investment bank could boost Orascom’s claim that France Telecom’s offer for its shares in ECMS, the Egyptian mobile operator owned by Mobinil, undervalues the company.
In a report published yesterday, Prime Capital finds that the…
A report by an Egyptian investment bank could boost Orascom’s claim that France Telecom’s offer for its shares in ECMS, the Egyptian mobile operator owned by Mobinil, undervalues the company.
In a report published yesterday, Prime Capital finds that the fair value of the operator lies between E£283 (U$52) and E£337 (US$62) per share – or a total of E£2.83bn to E£3.37bn (US$518m-US$618m) .
This exceeds the E£243 (US$44) that France Telecom has offered to pay for Orascom’s 20% of shares in ECMS.
It is also higher than the E£273 that it offered for Orascom’s 29% stake in Mobinil, which owns 51% of ECMS.
Mobinil appointed Prime Capital after the Egyptian Financial Supervisory Authority (EFSA) ordered it to appoint an independent financial advisor to evaluate FT’s tender offer.
Mobinil previously said that its board would use the evaluation to reach a decision on FT’s offer.
In a surprise twist, the EFSA gave its backing last month to FT’s latest offer for Orascom’s ECMS shares. However, Orascom claims it significantly undervalues the company and has vowed to go to court to resist the bid.
Prime Capital, which has spent four months on the report, found that Mobinil is worth E£263-265 per share for a portfolio investor, or E£283-E£337 for a strategic investor.
It says it found these figures using several methods including discounted cash flow valuation; a comparable valuation based on EV/EBITDA for listed telcos; EV/EBITDA multiples of 7.45x for recent acquisitions in the telco sector and a Greenfield proxy indicator.
It pinned the latter at E£28.3bn, in part due to Mobinil’s market dominance and high EBITDA margin of 47%.