Pharos Research raised Telecom Egypt fair value estimate and kept a "buy" rating, saying the landline monopoly’s first six months’ performance surpassed expectations.
The brokerage, which raised the fair value for the stock to LE 21.9 from LE 20.3, said the company’s net margin seems impressive but profitability was hurt by certain non-operational items.
Pharos also said Telecom Egypt’s retail business continues to be under pressure against a highly competitive mobile landscape.
"Company’s retail business remains under pressure, and strength in the wholesale segment came largely from the recognition of submarine cable’s contribution," Pharos said in a note to clients.
Telecom Egypt’s retail voice revenue has been drained by intense competition in the mobile market. Egypt’s three mobile operators have cut prices to garner market share, leading many consumers to use landlines less or discard them altogether.
Shares of the company, owned 80 percent by the Egyptian government, closed at LE 16.93 Sunday.
