CAIRO: Egypt’s giant telecom operator Orascom Telecom (OT) announced Tuesday its participation in a consortium chosen to create a new Canadian wireless operator.
OT – which currently operates in six countries – said it formed a joint venture with Canada’s Globalive Communications Corp to bid for the new license offered by the Canadian government to enhance competition in the country’s wireless market.
The Egyptian-based firm said in a statement the Globalive-OT consortium had provisionally won a license for wireless spectrum in Canada and was the high bidder across every region, with the exception of Quebec, with population coverage of 26 million.
The auction of airwaves over which wireless services are delivered raised 4.25 billion Canadian dollars in 331 rounds and almost two months of bidding. The proceeds were more than twice the amount analysts had expected, Reuters reported.
According to OT statistics, total cost of the bid stands at approximately 442 million Canadian dollars ($441 million). The company said it was waiting for the final regulatory approval for the license.
If granted final approval, OT will own a non-controlling stake in the new Canadian wireless operator, said Karim Hosny, trader at Pharos Brokerage.
“Under Canada’s foreign ownership law, OT will not own more than a 45 percent stake in the new operator, he said.
“We are very excited about this opportunity to develop a presence in Canada, a country with a very interesting growth profile, a mobile penetration rate lower than that of a number of countries in which we operate, a very high ARPU [average revenue per user], and only one operator offering GSM services and enjoying GSM roaming revenues,
Naguib Sawiris, chairman and CEO of OT, said in the statement.
“Developing this business is in line with our strategy of investing in high growth countries which provide superior returns to our shareholders, he added.
According to HC Securities, Canada has a population of over 33 million and enjoys a low mobile penetration rate of 58 percent versus countries such as the US where penetration rate stands at more than 77 percent and the UK and Hong Kong at over 100 percent.
Canada’s ARPU stands approximately at 55 Canadian dollars, while Canadians pay an average of 60 percent more for mobile wireless services than Americans and lack the high-tech mobile services introduced globally such as fast internet connections, video conferencing and TV streaming.
“For these reasons, OT views the Canadian market as an attractive investment opportunity with a very interesting growth profile, HC Securities said.
On the heels of the news, shares in OT rose 0.74 percent on Tuesday to close at LE 59.85. “The news lifted the stock on Tuesday but it was one among several other factors, Hosny pointed out.
He explained that OT hit a wave of good news over the past few days that also helped boost its trading on the Egyptian bourse on Tuesday.
The firm recently revealed news it will venture into two African countries, namely Burundi and Central African Republic. It also announced it won a mobile banking license in Pakistan. “Furthermore, the company said it will begin operations of its new North Korea license next September. Plus, the Canadian consortium. All these factors, pushed the stock upwards, he added.
“OT saw buying activities on Tuesday and traded on good volumes despite the market’s [ongoing] weak performance.
Hosny advised investors to add/buy in OT shares, however, with caution in light of the market’s downtrend. “The stock is relatively very cheap these days, but still we need to see a positive trend in the market so that the stock can rise adequately.