Bloomberg News

Orascom Telecom Holding Rallies 51% After Split: Cairo Mover

January 23, 2012

Jan. 22 (Bloomberg) -- Orascom Telecom Holding SAE soared on investor bets the shares were undervalued after the company split into two units and as the stock resumed trading after a two-month halt.

The shares jumped 51 percent to 2.62 Egyptian pounds at the 2:30 p.m. close in Cairo, pushing Egypt’s benchmark index 1.3 percent higher. Orascom Telecom Holding’s global depositary receipts, which haven’t been split and represent five ordinary shares each, have climbed 46 percent to $3.26 since Nov. 23, the day before the Egyptian exchange suspended local trading.

After the split, Orascom Telecom Holding holds 58 percent of the original company’s assets, including those in Algeria, Pakistan and Bangladesh. Orascom Telecom Media & Technology Holding SAE, the split-off entity, owns the Egyptian and North Korean assets. Orascom Telecom Media shares, which were priced at 1.25 pounds, tumbled 28 percent to 90 piasters.

“Most research houses saw the 58-to-42 split as an undervaluation for Orascom Telecom Holding and exaggerated valuation for Orascom Telecom Media,” said Wafik Dawood, director of institutional sales at Cairo-based Mega Investments Securities.

Eight analysts recommend investors buy Orascom Telecom Holding, according to data compiled by Bloomberg. Cairo-based investment bank Beltone Financial Holding rated Orascom Telecom Holding a “buy” on Jan. 18 and set a share-price estimate of 5.69 pounds. The firm assigned Orascom Telecom Media a “sell” recommendation with a 1.12-pound target.

Shareholders approved dividing Orascom Telecom to facilitate a $6.5 billion merger between parent Wind Telecom SpA and Russia’s VimpelCom Ltd. The GDRs of the mobile phone company have surged on investor bets that the shares were undervalued and after Algeria signed an agreement with VimpleCom to buy Orascom’s local unit, Djezzy.

--With assistance from Claudia Maedler in Dubai. Editors: Andrew J. Barden, Claudia Maedler

To contact the reporter on this story: Zahra Hankir in Dubai at zhankir@bloomberg.net; Ahmed A Namatalla in Cairo at anamatalla@bloomberg.net

To contact the editor responsible for this story: Claudia Maedler at cmaedler@bloomberg.net


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