Investment case Egypt's sole fixed-line telecommunication operator.

1. Telecom Egypt ETEL.CA/ETEL EY | Buy Recommendation | Moderate Risk | LTFV EGP21.9 | Target Price EGP21.0 | Analyst: Mohamed Hamdy Investment case • Egypt's sole fixed-line telecommunication operator. • Capitalizing on Egypt’s mobile sector growth through its wide network (infrastructure leasing) and 45% stake in Vodafone Egypt (VFE). • Capitalizing on the rapid growth of internet sector through its ISP subsidiary, TE Data. Upside Catalysts • Exploiting its high net cash position (EGP4bn) by providing value-added services (VAS). • New growth opportunities by offering mobile-phone services through the Mobile Virtual Network Operator (MVNO). • Triple-play services, considered value added services, will stimulate subs growth. • TE North to generate USD500mn during the next 15-year period. Downside Risks • Intensified pressure from wireless competition. • Fixed-mobile substitution (FMS) threatens the growth of active telephone lines. • Investment in VFE may be undermined as mobile growth cools off. • Interconnection dispute with mobile operators could hit ETEL’s profitability. • Shareholder Structure • Government of Egypt 80% • Free Float 20% • 52-Week Performance & Share Data (*EGX suspended 27th Jan – 23rd Mar 2011) Key Performance Indicators Company Profile ETEL is a provider of retail services including access, voice, and internet & data. It is also the sole provider of wholesale services (including broadband capacity leasing to ISPs) and both national and international interconnection services. ETEL is one of the largest fixed-line providers in Middle East & Africa, with more than 9.3mn subscribers by end of 2010. ETEL competes in Egypt’s fast-growing mobile market through its 45% stake in Vodafone Egypt (VFE), Egypt’s largest mobile operator