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BUSINESS RECAP: OCI acquires 50 percent of Group GLA in LE 51.3 mln deal - Daily News Egypt

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BUSINESS RECAP: OCI acquires 50 percent of Group GLA in LE 51.3 mln deal

CAIRO: Orascom Construction Industries (OCI) announced Monday it has accomplished the acquisition of a 50 percent stake in Group GLA, Spain s largest producer of ready-mix concrete and aggregates for LE 51.3 million. The new joint venture has agreed to a price of LE 40 million, according to an OCI statement. Group GLA operates 11 …


CAIRO: Orascom Construction Industries (OCI) announced Monday it has accomplished the acquisition of a 50 percent stake in Group GLA, Spain s largest producer of ready-mix concrete and aggregates for LE 51.3 million.

The new joint venture has agreed to a price of LE 40 million, according to an OCI statement. Group GLA operates 11 quarries with an annual production capacity of 5 million tons of aggregates and reserves exceeding 240 million tons. The acquisition is expected to open the door for Egyptian clinker exports from OCI subsidiaries and other local producers, as Group GLA will operate two clinker-grinding facilities with a total capacity of 1.5 million tons annually.

Going forward, the combined clinker grinding plants, which require up to 1.5 million tons of clinker annually, will serve to alleviate the rising supply deficits in Spain and surrounding markets, says OCI Chief Executive Officer Nassef Sawiris in the statement.

With an annual supply deficit of around 10 million tons, Spain is one of the largest importers of cement in the world and the largest consumer in Europe. Group GLA recorded LE 84 million in revenues and LE 10 million in net income in the first half of this year. OCI expects the new joint venture will generate LE 250 million in revenues during its first year.

Our new investment in Spain is a continuation of our long-term strategy to enhance our presence in markets suffering from structural cement supply deficits and further affirms our view on the increased significance of aggregates reserves and distribution in these markets, Sawiris says.

Egypt Post expects LE 100 million profit from share in third mobile company

CAIRO: Egypt Post (EP) Chairman Alaa Fahmy says he expects his company s 20 percent stake in the third mobile operation, Etisalat Egypt, will earn his company LE 100 million in annual net income, according to Al-Masry Al-Youm.

Fahmy says EP plans to participate in revenue generation by using its 3,600 offices throughout the country to promote the third mobile operator. Detailed plans have not been discussed with Etisalat officials yet, he says, but they could include providing mobile communication services in post office outlets as well as distribution for pre-paid phone cards.

EP sold its 8.1 percent in Vodafone Egypt earlier this year in favor of entering the Etisalat-led consortium that eventually won the country s third mobile operator s license for LE 16.7 billion. UAE s Etisalat is majority owner of Etisalat Egypt with a 66 percent share, followed by EP and the National Bank of Egypt with 20 percent each and Commercial International with 4 percent. The consortium beat 11 offers from European, Arab and Asian consortia in July.

Fahmy says EP will use the revenue earned from its sale of the Vodafone stake to modernize post outlets in order to best participate in the promotion of the new operation.

Etisalat Egypt, so far the lone 3rd Generation license holder, says it will aim for 70 percent network coverage by the end of the first year, 85 percent after the second, and 100 percent after three years, Chief Executive Officer Saleh El-Abduli says. The company is now working out contracts with existing mobile operators Mobinil and Vodafone to lease their infrastructure for at least two years and is scheduled to begin offering commercial services in February 2007.

Despite high consumer anticipation of the third network, some analysts doubt the market s ability to afford 3G technology and the new operator s ability to gain significant market share without lowering even further one of the lowest per minute rates in the Middle East. EFG Hermes Senior Analyst Wael Ziada says the company will have trouble turning profit because of the high licensing fee already paid and projected high start up costs.

Still, others point to the exponential growth the two existing operators saw in the past two years as evidence of the high potential for demand even for initially expensive technologies in the market. According to NTRA figures, mobile penetration reached 19.5 percent in June 2006. Minister of Communication and Information Technology Tarek Kamel says he expects the number to reach 40 percent by 2010. The number of subscribers, almost evenly split between Mobinil and Vodafone, has reached 14 million, up from 2.9 million in June 2005 and just 650,000 in October 1998 when mobile technology was first introduced.

Topics: FJP

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