Global Telecom Holding SAE surged the most in more than two years after its parent company, VimpelCom Ltd. (VIP), agreed to sell a stake in their Algerian business, ending a three-year dispute with the North African nation’s government.
Shares of the mobile-phone company surged 9.2 percent, the most since Jan. 2012, to 4.97 Egyptian pounds in Cairo. The Exchange restricts daily movements in stocks to 10 percent up or down. The company’s global depositary receipts in London, each equivalent to 5 regular shares, soared 14 percent to $3.711 on 3.7 times the three-month average daily volume.
Cairo-based Global ended an ownership dispute with the Algerian government after VimpelCom agreed to sell a 51 percent stake in Orascom Telecom Algerie SpA to the Algerian National Investment Fund for $4 billion. The deal averts arbitration proceedings sought by Global after Algeria levied tax claims on Djezzy, as Orascom’s brand is known, and blocked dividend payments to its parent. Under the agreement, Djezzy will pay a $1.86 billion dividend to Global Telecom.
“The deal is positive in the short term because Global managed to unlock asset value after three years of a very unfavorable environment in Algeria,” Ahmed Adel, equity analyst at Cairo-based Naeem Holding, said by phone. “In the long term, shareholders will benefit from increased dividend payouts.”
Amsterdam-based VimpelCom said it will use most of the proceeds to repay debt, according to a company statement. Global Telecom’s shares led gains on the benchmark EGX 30 Index, which advanced 2 percent to 8,269.02, the highest since March 26.
Naeem raised the stock to buy with a share price estimate of 6.1 pounds, taking the tally of similar recommendations to seven against four sells and one hold, according to data compiled by Bloomberg.
To contact the reporter on this story: Ahmed A. Namatalla in Cairo at firstname.lastname@example.org
To contact the editors responsible for this story: Samuel Potter at email@example.com James Doran