Telecom Egypt’s share of Vodafone’s accumulated earnings reaches $274.3mln in Q3 2020

The BUY recommendation on Telecom Egypt with a TP of EGP 19.1/share

  
The logo of Telecom Egypt is seen on a building in Cairo, Egypt September 12, 2017.

The logo of Telecom Egypt is seen on a building in Cairo, Egypt September 12, 2017.

REUTERS/Amr Abdallah Dals

Telecom Egypt’s share in Vodafone Egypt’s total accumulated retained earnings reached 45%, recording EGP 4.3bn ($275m) in the third quarter (Q3) of 2020, according to the Accountability State Authority.

Naeem Research said that the probability of Vodafone Egypt’s distributing dividends depends a lot on its new investment plans; including the purchase of the new 40MHz band of spectrum in 2600MHz in November for $540m, with 50% to be paid in the first year of singing the contract. Additional EGP1.5bn will be directed to purchase technical telecommunication devices to utilise the new spectrum.

Naeem added that while the significant capital expenditure plans do lower the probability of a mega dividend, the question is whether Vodafone Egypt will make a large disbursement to Telecom Egypt (pertaining to its share of accumulated profits) in the event of the former’s successful acquisition by STC (which as of now, is officially off the table).

Naeem maintains the BUY recommendation on Telecom Egypt with a TP of EGP 19.1/share.

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