Shares in Telecom Egypt (TE) are forecast to rise by 32 per cent if the company chooses to pay a bumper dividend to shareholders this year.
Egypt's incumbent fixed-line telephone monopoly has more than 5 billion Egyptian pounds in cash, and analysts say it is under pressure from the government to issue a high dividend this year.
In a research note, HC Securities & Investment said it expected TE to issue a dividend of 0.39 pounds at the end of this month.
This could be followed by an additional dividend issued in March that is forecast to prompt a share-price boost, HC Securities said in a note. "TE can increase [its dividend per share] to 2 pounds … while maintaining cash balance at 5.9bn pounds, in our view," the note said.
This would give the company a share price target of 18.5 pounds, according to HC Securities.
"If the company announces a dividend today of 2 pounds per share, we think the stock price can go up to around 18 pounds," said Karim Khadr, the regional head of research and senior telecoms analyst at HC Securities.
Mr Khadr cited "pressure" from the government, which owns 80 per cent of TE, on the company to pay a high dividend
He added the markets could react negatively if a significant dividend was not paid. "If it happens, buy the stock," Mr Khadr said. "If it doesn't, the stock will not move. In fact, the stock may come under pressure."
Ibrahim Masood, a senior investment officer for asset management at Mashreq, said TEwas a potential source of cash for the Egyptian government. "It's not rocket science that the Egyptian government is in greater need for cash than normal at the moment," he said.
Despite the cash on the company's books, Mr Masood said the TE had few prospects for additional growth. "Telecom Egypt would appear to be a one-trick pony. It's all about the dividend," he said.
"Aside from the dividend, I don't know why you would look at Telecom Egypt. There seems to be almost a complete consensus that there's hardly any growth in the underlying business."
Challenges for the company include "upward pressure on staff costs" and gaining more exposure to the mobile-phone market, Mr Masood added.
Shares in TE, which are listed on the Egyptian Exchange, yesterday closed at 14.11 pounds, a rise of 0.93 per cent.
bflanagan@thenational.ae
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Starring: Rose, Jisoo, Jennie, Lisa
Directors: Min Geun, Oh Yoon-Dong
Rating: 3/5
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UK-EU trade at a glance
EU fishing vessels guaranteed access to UK waters for 12 years
Co-operation on security initiatives and procurement of defence products
Youth experience scheme to work, study or volunteer in UK and EU countries
Smoother border management with use of e-gates
Cutting red tape on import and export of food
If you go
The flights
There are direct flights from Dubai to Sofia with FlyDubai (www.flydubai.com) and Wizz Air (www.wizzair.com), from Dh1,164 and Dh822 return including taxes, respectively.
The trip
Plovdiv is 150km from Sofia, with an hourly bus service taking around 2 hours and costing $16 (Dh58). The Rhodopes can be reached from Sofia in between 2-4hours.
The trip was organised by Bulguides (www.bulguides.com), which organises guided trips throughout Bulgaria. Guiding, accommodation, food and transfers from Plovdiv to the mountains and back costs around 170 USD for a four-day, three-night trip.
Killing of Qassem Suleimani
Titanium Escrow profile
Started: December 2016
Founder: Ibrahim Kamalmaz
Based: UAE
Sector: Finance / legal
Size: 3 employees, pre-revenue
Stage: Early stage
Investors: Founder's friends and Family
THE BIO
BIO:
Born in RAK on December 9, 1983
Lives in Abu Dhabi with her family
She graduated from Emirates University in 2007 with a BA in architectural engineering
Her motto in life is her grandmother’s saying “That who created you will not have you get lost”
Her ambition is to spread UAE’s culture of love and acceptance through serving coffee, the country’s traditional coffee in particular.
Our family matters legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
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Director: Hwang Dong-hyuk
Stars: Lee Jung-jae, Wi Ha-joon and Lee Byung-hun
Rating: 4.5/5
INDIA%20SQUAD
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How to apply for a drone permit
- Individuals must register on UAE Drone app or website using their UAE Pass
- Add all their personal details, including name, nationality, passport number, Emiratis ID, email and phone number
- Upload the training certificate from a centre accredited by the GCAA
- Submit their request
What are the regulations?
- Fly it within visual line of sight
- Never over populated areas
- Ensure maximum flying height of 400 feet (122 metres) above ground level is not crossed
- Users must avoid flying over restricted areas listed on the UAE Drone app
- Only fly the drone during the day, and never at night
- Should have a live feed of the drone flight
- Drones must weigh 5 kg or less
Tamkeen's offering
- Option 1: 70% in year 1, 50% in year 2, 30% in year 3
- Option 2: 50% across three years
- Option 3: 30% across five years
