Orascom Telecom Media & Technology

(OTMT.CA) Re-Initiation Of Coverage

Egypt | Telecoms

Buying The Future

Target Price

Market Price

Recommendation

Upside Potential

Investment Grade

EGP1.01

EGP1.03

HOLD

-2%

Speculative

Executive Summary

OTMT.CA

Sector

We re-initiate our coverage on OTMT with a Hold recommendation,

We used sum of the parts valuation model - SOTP to account for the different
nature of operations among the companys business segments. Target price
came at EGP1.01/share USD0.66/GDR, we believe that the current market
price fairly reflects the high risk profile in Koryolink.

Telecoms

Company Traded Market

EGX

Report Reason

Re-initiation

Stock Currency

EGP

Exchange Rate

LE7.63/USD

Market Cap (EGP Mn)

5,403

Outstanding Shares (Mn)

5,246

Par Value/Share (EGP)

0.42

Price Low High (EGP)

1.46 - 0.94

Av. Daily Traded Volume

The Real Value of North Korean Currency In Question

Official rate announced by the North Korean central bank currently stands at
135 KPW/USD. While the black market rate can be considered the true market
rate, which has been eroded by inflation, presently around 7,100 KPW/USD. A
severe adjustment for the North Korean currency implies high discounts for
Koryolink enterprise value and trapped cash balance.
New Expansion Strategy - A New Business Model
OTMT unveiled its intentions turning into a holding company investing in three
main industries GSM, Energy and Logistics in Egypt. The company has already
took certain steps in this regards which we consider the best use of the available cash.

51.6 Mn

Shareholders

Non-Core Assets Divesture, Mobinil sale along with OT-Ventures sale

secures the required cash for the new expansion plan. OTMT accumulated around EGP1.6 billion in proceeds net of tax from Mobinil sale, beside the
EGP100 million sale proceeds net of tax from OT Ventures, this cash to boost
the investment strategy.

Ownership Stake

OTMT Acquisition SARL

52%

Other Shareholdings

8%

Free Float

40%

MENA Cable finally started operations while management plans to reach a

10% market share of the incremental addressable market with the company
target sales from the cable business over USD140 million in the coming 3 years.

Senior Analyst

Mahmoud Mardishy

Phone

+202 33005 719

Email

[email protected]

Stock Performance Chart

(EGP/ Share)

1.40

160

1.20
1.00

120

TargetPrice:
EGP1.01

0.80

Mn Shares

200

1.60
EGP/share

April 23, 2015

80

0.60
0.40

40

0.20

0
Apr-15

Mar-15

Jan-15

Feb-15

Dec-14

Oct-14

Volume

Nov-14

Sep-14

Jul-14

Aug-14

Jun-14

Apr-14

May-14

0.00

OTMT

Source: Bloomberg

Prime Research

OTMTs consolidated results showed a top line growth of 10.5%

reaching EGP2.7 billion in 2014, up from EGP2.4 billion in 2013, backed by
the continued growth from the North Korean arm - Koryolink revenue, EBITDA
also showed improvements reaching EGP1.5 billion with EBITDA margin of
54%, compared to EGP1.2 billion and 48% in 2013 respectively. We believe the
operational results deemed normal and yet to show further improvements after
the divesture of the non-core assets (OT ventures and Mobinil).
Financial Highlights

2013a

2014a

2015f

2016f

2017f

Revenue (EGP mn)

2,471

2,707

3,301

3,642

3,889

Growth

12%

10%

22%

10%

7%

EBITDA margin

70%

70%

74%

74%

73%

Net Income (EGP mn)

1,119

264

2,522

1,698

1,789

Net Attr. Income (EGP mn)

1,119

264

2,522

1,698

1,789

EPS (EGP)

0.1

-0.012

0.409

0.3

0.3

DPS (EGP)

0.3

0.0

0.0

0.0

0.0

BVPS (EGP)

1.3

1.2

1.7

1.9

2.2

P/E x

7.47

NA

2.52

3.74

3.55

Dividend Yield

25%

0%

0%

0%

0%

P/BV x

0.80

0.83

0.62

0.53

0.46

Source: OTMT & Prime Estimates

Orascom Telecom Media & Technology

(OTMT.CA)
Re-Initiation of Coverage

Egypt | Telecoms

April 23, 2015

A New Story,
Expansion Strategy - No More a Telecom Player OTMT unveiled its intentions turning into a
holding company investing in three main industries in Egypt; GSM, Energy and Logistics.

The GSM, to remain in

OTMTs core segments, which represents its main experience and know how.

OTMT started a solar

energy plant with estimated initial investment around USD120
of which 80% is
planned to be financed
by debt.

Logistics sector represents the Trojan horse

of economic growth in
Egypt, where we
reckon to witness a
promising growth, give
the
governments
stimulus package for
infrastructure, coupled
with the Suez canal
project.

The GSM - Experience Backlog Has been and will continue to be the companys main segment and
its area of expertise. Currently, the company assets are dominated by its North Korean Mobile operator
Koryolink which represents more than 50% of assets by the end of Sep 2014, and represents around 70%
of total consolidated revenue. However the currency repatriation policies applied by the North Korean government makes it a more betting game, which motivates OTMT management to seek other investments in
the segment, in the EMEA region whether by acquiring a mobile operator or starting a new mobile operations. Its worth noting that OTMT is no more bidding for Mobinil mobile towers, however it
still show willingness to invest in mobile infrastructure as well.
Sustainable Energy Value Exploration As Egypt is one of the major countries in the world blessed
with high solar intensity of direct solar radiation (2,000-2,600 KWh/m2) which shows a great potential for
solar energy development, especially in Upper Egypt. Beside studies have revealed that with the present
rate of usage, all fossil fuel resources will be practically depleted within this decade thereby stressing the
need to develop cheaper sources of renewable energy of which solar applications would play an important
role. While the Egyptian government seeks to reform the energy system, targeting approximately 12-15
GW of production over the next five years by the local and international private sector, the government
plans to introduce a feed-in tariff and a seamless licensing process to boost private investment. Furthermore, it will reduce the cost of infrastructure investment for renewable energy companies by identifying
logistically suitable areas and at the same time providing the locations with connection access to the national grid. OTMT seized the day, and showed eagerness by partaking in renewable energy in
Egypt, and recently signed a MoU with the ministry of electricity to build a solar energy plant
with estimated initial investment around USD120 million and takes around 12-18 month to
start operating, its worth noting that management has revealed intention to borrow around
80% of the plant financing from banks. While guidance regarding the operations and how
many solar or wind plants would be started are not available yet, and consequently not reflected in the target price.
Logistics & Transportation - Delivering Potentials The transportation sector is the Trojan horse of
economic growth in Egypt, where all sectors of the national economy depend on the services and facilities
of this sector to link both production and consumption markets together. The unique geographic position
of Egypt connecting the international trade between Europe, the Middle East, Africa and Asia makes Egypt
to become a major global logistics hub. The Suez Canal is crucial to both global shipping and to the Egyptian economy, with the waterway representing one of the biggest revenue-generators in Egyptian trade. It
connects the Red Sea to the Mediterranean and acts as the country's major source of foreign currency,
which is also generated by oil and gas exports, tourism and remittances from Egyptians living abroad. With
the growing domestic demand for imports and a rapid rise in export oriented businesses the demand increase for logistics and transportation services raising potential areas for investments in the sector. OTMT
targets investing in the logistics and transportation to reap the potential uptake in the sector while targets
to grasp the know-how of the business by entering partnerships with global players or by acquiring existing companies that have operational excellence.
Non-Core Assets Divesture,

We Believe
OTMT
managed to reach the
best divesture for Mobinil remaining 5%
shares

Prime Research

In late Feb 2015, Orange (formerly France Telecom) agreed to exercise its call option buying OTMTs 5%
stake in ECMS, and 28.75% of the voting rights in MT Telecom, for a gross proceeds of approximately
EUR209.6 million. The transaction is seen the best close of the deal with Orange. We were expecting that
OTMT would exercise the put option for the 5% remaining direct stake in Mobinil to 1.67% per annum
over a three-year period from 2015 to 2017. while the positive part was luring Orange to exercise the option to call all of OTMTs direct and indirect stake, While taxation will have different rates, 10% capital gain
tax for the proceeds from Mobinil stake and 30% for the proceeds from selling the voting rights, implying
a net proceeds of EGP1.6 billion from the sale, representing EGP0.3 per OTMT share.

Orascom Telecom Media & Technology

(OTMT.CA)
Re-Initiation of Coverage

Egypt | Telecoms

April 23, 2015

At the mean time we reckon further positive effect on OTMTs profit margins post sale effective 2015, as this sale would save the share of losses coming from Mobinil in the short term.
Besides Mobinil Sale, the board of OT Ventures (OTMTs fully owned subsidiary) approved the sale of its
internet based assets and their subsidiaries for a net equity value of EGP100 million. These assets, operating in Mobile Value Added Services, Online Advertising, Development and Content Management, include: Link for Programming Development - Connect Ads for Advertising and Programming - Link on line - Arab
finance for Brokerage - Link Register - ARPU For Telecommunication Services - Egypt Call S.A.E - Otlob.com for Restaurant Reservation Services - LINK dot NET Al Arabia El Saudia - LINK dot NET Qatar LINK dot NET UAE. The transaction is was closed during the first quarter of 2015.
We reckon no dividend distribution in the short term as OTMT will be investing the proceeds
of this divesture in the expansions plan.

Company, Industry Briefings

Orascom Telecom Media & Technology Holding (OTMT.CA) is an Egyptian joint-stock company incepted in
Nov. 2011 as a divestment of Global Telecom Holding (GTHE.CA) formerly was known as Orascom Tele-

Figure 1. OTMTs key subsidiaries by operational segments, and ownership percentage (direct
and indirect).

Source: OTMT

com Holding (OTH) (ORTE.CA). OTMT is a holding company that has investments in subsidiaries with operations mainly in North Korea, Egypt, Lebanon and other North African and Middle-Eastern countries.
The GSM Segment
The largest contributor to OTMTs Top line and bottom line, the core operational and management expertise,
Koryolink, a 75% owned subsidiary in the republic of North Korea, jointly with the state-owned KPTC, it
is one of the rare cases of green-field operations in the world telecom industry. The unit was launched by
the end of 2008, with a 25-year license as well as a four year monopoly, and 5 years tax holiday.

Prime Research

Orascom Telecom Media & Technology

(OTMT.CA)
Re-Initiation of Coverage

Egypt | Telecoms

April 23, 2015

Orascom Telecom Lebanon-OTL, Is the primary management for Alfa, one of two operating GSM networks in Lebanon owned by the Ministry of Telecommunications (MoT) in Lebanon. The management contract has recently been renewed by the Republic of Lebanon until a further notice. Alfas coverage reaches
98.3% of the Lebanese territories and 98.8% of the populated areas.
Mobinil, Post the demerger in 2012, The holding of Mobinil was transferred to OTMT, in the recent transaction as discussed earlier, OTMT sold-out all its direct and indirect stack in Mobinil to Orange, this transaction seen positively affecting OTMT, to secure some cash required for the expansion plan, beside curbing the share of losses from Mobinil.
Media & Technology Segment
The ownership of the internet based assets was shifted to OTMT post the demerger. While at the meantime the board of its fully owned subsidiary OT Ventures approved the sale its internet based assets and
their subsidiaries for a total equity value of EGP100 million. While the company recorded an impairment
loss of EGP60 million to account to the different between the book value and the agreed sales value. The
media and technology will no more appear in the reporting structure going forward.
Cable Business
Trans World Associates - TWA, is Pakistans leading submarine fiber optic cable operator started operations in 2006. OTMT holds a 51% ownership stake in TWA, which is a joint-venture with Orastar Limited,
UK and Omzest group of Oman. TWA owns and operates its own cable system, known as TW1, and provides direct broadband and high-speed connectivity to telecom operators, internet service providers and
major corporations.
MENA Cable, is a fiber optic submarine cable system connecting three continents (Europe, Africa and
Asia), and spanning two seas (the Mediterranean and the Red Sea) and one ocean (the Indian Ocean).
MENA Cable in its first phase of operation spans a distance of 8,800 km and lands in Italy, KSA, Oman and
India passing through Egypt with potential for expansion through additional landing points in East Africa
and East of the Mediterranean Sea. The company plans also include serving the Far East through partnerships with other international submarine cables. With the latest technology of 100 Gbps, the connectivity
services provided by MENA submarine cable system provide the lowest latency between South Asia,
Europe and the Middle East amongst existing competitive cables. MENA Cable plans to reach a 10% market share of the incremental addressable market with the company target sales over USD140 million in the
coming 3 years.

Prime Research

Orascom Telecom Media & Technology

(OTMT.CA)
Re-Initiation of Coverage

Egypt | Telecoms

April 23, 2015

Financial Summary
OTMTs consolidated results showed a top line growth of 10.5% reaching EGP2.7 billion in 2014, up from
EGP2.4 billion in 2013, backed by the continued growth from the North Korean arm Koryolink revenues,
EBITDA also showed improvements reaching EGP1.9 billion with EBITDA margin of 70%, compared to
EGP1.7 billion and 70% in 2013 respectively. We believe the operational results deemed normal and yet to
show further improvements after the divesture of the non-core assets (OT ventures and Mobinile).
Figure 2. Revenues to sustain growth backed by the
accretive subscribers base in Koryolink.

Source: OTMT & Prime Estimates

Figure 3. EBITDA margin to witness enhancement post

non-core assets divesture.

Source: OTMT & Prime Estimates

Yet below the line, OTMT have logged EGP340 Figure 4. Profit margin to jump on Mobinil sale in 2015
and stabilize around 35% going forward.
million losses from financing in 2014, against
EGP341 million gains in 2013 mainly due to
changes in financial derivates valuation, in addition to the increase in taxes on profits, due to the
end of tax holiday on Koryolink the major assets.
consequently, logged a net loss after tax and
minority amounting EGP62 million in 2014
against EGP723 million profits in 2013.
While for 2015, we reckon top line to show further improvements to record EGP3.3 billion up
Source: OTMT & Prime Estimates
from EGP2.7 billion in 2014 supported by Koryolink subscribers accretion, moreover EBITDA to reach EGP2.4 billion and EBITDA margin to reach 74%
compared to EGP1.9 billion and 70% in 2014 respectively. This boost is backed by 1) the divesture of OT
Ventures which have been accumulating losses from operations for the last couple of years, 2) the launch
of MENA cable operations which is expected to boost EBITDA of the Cable Business starting 2015.
While we reckon net profits to significantly lunge recording EGP2.1 billion in 2015 fueled by Mobinil capital
gain, coupled with absence of the historical share of loss from subsidiaries. NPM to reach 65% in 2015 and
to stabilize around 35% going after.

Prime Research

Orascom Telecom Media & Technology

(OTMT.CA)
Re-Initiation of Coverage

Egypt | Telecoms

April 23, 2015

Key Assumptions & Forecasts

GSM Segment
The North Korean Mobile Market,
North Korea have introduced the mobile for the first time in 2002, while it was banned again in 2004 for
security measures, and was newly introduced in 2008 by Koryolink the joint venture between OTMT
(75%) and the state-owned Korea Post and Telecommunications Corporation (KPTC) (25%), on the other
hand Koryolink has no international roaming agreements. International calls and internet usage is panned
for the domestic citizens. The main subscribers in North Korea are members of the elite being. Due to the
high cost of the mobile phone beside the process of activating the cell phone which requires the approval
of Ministry of Peoples Security.
The below figure shows the penetration rates revolution over the countries who lately introduced mobile
operations, showing that the booming increase in penetration rates started by 2007 given technology advances, Up-till now mobile penetration is doing well in North Korea, and yet we recon we recon Koryolink
would sustain the increasing penetration rates Albeit with a decreasing net additions, given the high cost
of the mobile phones, and the hard mobile registration process given the government actions to ban information flow into and out of North Korea. Yet liberalization of internet usage and removing the duties on
mobile phones imports would imply a massive surge in mobile subscribers in North Korea.
Figure 5. Countries penetration rates revolution for some countries which lately introduced mobile services.

Source: World Bank & Prime Estimates

Koryolink currently the major contributor to OTMTs top line. It have seen a successive growth rates with
tremendous revenue generation in the last 5 years where mobile subscribers reached 2.6 million by Dec2014 more than fivefold subscribers of 2010, we reckon mobile subscribers to further uptake given the low
mobile penetration rates in the North Korean market of 10 subscriber per 100 inhabitants in 2014.
Figure 6. ARPU slide, positively affecting top line and
EBITDA.

Source: OTMT & Prime Estimates

Prime Research

Figure 7. Foresee higher penetration rates while decreasing annual net adds.

Source: OTMT & Prime Estimates

Orascom Telecom Media & Technology

(OTMT.CA)
Re-Initiation of Coverage

Egypt | Telecoms

April 23, 2015

The Real Value Of Korean Currency

One of the unclear issues in North Korea, is the currency exchange rate, where the country struggles to
force an official rate which is apparently pegged to the Chinese currency, which itself is begged to the
dollar. The official rate counts at specific locations in the country and transactions in this rate only exists
on a debit card or in local bank accounts, which are fed with foreign currency, and several locations, including some Hotels. While the black market rate can be considered the true market rate, which has been
eroded by inflation, presently around 7,100 KPW/USD. The regular circulating banknotes are exchanged
with the black market rate. On the mean time, the North Korean government pursue dominating the official rate and continuously apply different tools trying to tackle down the black market.
Yet, we believe that using the official rate will not reflect the real value of Koryolink operations and the trapped cash in KPW currency. Knowing that OTMT financials account for KPW
with official rate, hence we conservatively discounted Koryolink value and restricted cash to
reflect the black market rate. Yet historically OTMT managed to receive around EUR7 million in dividends calculated at rate close to the official rate, as a result if OTMT managed to reach an agreement with
the NK government on an exchange rate below the black market would yield an upgrade to target price.
OT Lebanon - ALPHA management, we reckon the Lebanon government to finally reach an agreement
with OT Lebanon for the management of the Alpha operations in the Lebanon market, we assumed fixed
payments to sustain, while introducing a decreasing incentive rate annually.
Cable Business
WTA revenue have been stable around the USD20 million in the past three years, we reckon an annual
growth rate of 3% over the next five years, while from MENA cable, management expect to accumulate
around USD30 million annually in the top line, we reckon MENA cable would reach USD30 million over the
next three years, and to sustain a 3% growth rate thereafter.
Figure 8. Group EBITDA breakdown, M&T absence to
Boost EBITDA in 2015.

Source: OTMT & Prime Estimates

Figure 9. Revenues breakdown by segment dominated

by Koryolink.

Source: OTMT & Prime Estimates

Figure 10. CAPEX to normalize around 19% of revenues over the forecast period.
We reckon CAPEX to stabilize around 19% of revenues
over the forecast period given that an excess CAPEX was
incurred in 2013 and 2014 related to MENA Cable linkage through Telecom Egypts network.

Source: OTMT & Prime Estimates

Prime Research

Orascom Telecom Media & Technology

(OTMT.CA)

Egypt | Telecoms

Re-Initiation of Coverage

April 23, 2015

Valuation
We used sum of the parts - SOTP discounted cash flow valuation model to account for the different nature
of operations among the companys business segments.
In our valuation of the North Korean telecom operator - Koryolink, we used a WACC of 21.8% to account
for the country risks, with a beta of 1.2 and perpetual growth rate of 4%, we calculated the enterprise
value of Koryolink at EGP8.3 billion. OTMT management guided that Koryolink operations are 75% dominated in KPW, hence we adjusted enterprise value of Koryolink to account for the black market rate resulting in an adjusted enterprise value of EGP2.3 billion. Knowing that the restricted cash balance in North
Korea which amounts EGP4.2 billion include amount of EGP608 million in EURO (EUR75 million), and the
rest in KPW, which should be adjusted to the black market rate.
While the rest of the operating segments were valued using a WACC of 17.0%, a perpetual growth rate of
2.5%, and a beta of 1.2. Target price came at EGP1.01/share, USD0.66/GDR, with 2% downside
risk compared to the market price of EGP1.03/share, accordingly we issue a Hold recommendation.

Consolidated DCF Model - Summary

2015f

2016f

2017f

2018f

2019f

NOPLAT
Non-cash Items
Gross Cash Flow
Change in Operating Working Capital
Capital Expenditure
Free Cash Flow
Present Value of Free Cash Flows
Terminal Value
Present Value Of Terminal Value
Value for Operation
Currency Adjusted Value For Operation
Net Cash
Currency Adjusted Net Cash

1,657
361
2,018
(649)
(615)
753
625
12,836
5,097
9,979
3,513
6,602
3,096

1,798
416
2,215
46
(679)
1,582
1,088

1,899
473
2,372
34
(725)
1,681
959

2,094
526
2,620
39
(802)
1,858
879

2,296
582
2,878
45
(881)
2,042
801

Long-term investment
Minority Sharholdings
Shareholder Value
DCF Value Per Share (EGP)

272
1,572
5,309
1.01

Market Price (EGP)

1.03

Upside potential

-2%

(EGP Millions)

Prime Research

Orascom Telecom Media & Technology

(OTMT.CA)

Egypt | Telecoms

Re-Initiation of Coverage

April 23, 2015

Adjusted Target Price for KPW Currency

Official Rate

Black Market Rate

8,344

2,207

399

399

Koryolink EV
OT Lebanon - Alpha EV
Cables Segment EV

707

721

Total Enterprise Value

9,450

3,327

Adjustments for Intra-year

1.06

1.06

Adjusted Value for Operation

9,979

3,513

745

745

3,575

69

Cash Summary
Holding Copmany
Restricted Cash in KPW
Restricted Cash in EUR

608

608

Mobinil Sales Proceeds

1,618

1,618

OT Venture Sales Proceeds

100

100

6,647

3,140

Add: Marketable Securities

272

272

Less: Value of Debt

44

44

1,572

1,572

15,282

5,309

2.91

1.01

183%

-2%

Total Excess Cash

Less: Accum. Discounted Minority Interest

Shareholder Value
DCF Value Per Share
Potential Return

SOWT Analysis
Opportunities

Strengths

management with a successful track record and

know how in the GSM market.

Suitable excess cash with a low debt, strong ability for

future leverage.

Short term cash sources to boost future investments.

The partnership with the North Korean government in

Owns the only 3G mobile-operator in North Korea that

has a relatively low mobile penetration rate with significant room for growth.

The

Huge potential in the companys new core segments in which energy, logistics, beside mobile infrastructure.

Koryolink provides the required support for sustainability.

Weakness

Highly

dependent on Koryolink in terms of revenues

and earnings despite the harsh restrictions on dividend
repatriation and tight currency controls in North Korea.

Unclear

future with regards to North Koreas political

policies and international cooperation.

New

core segments, might expose the company to

business risks due to the diversification in the business
structures.

Prime Research

Threats

Persistence

of currency protection and dividend repatriation restrictions imposed by the North Korean government which harshly limit OTMTs ability to pay dividends.

Instability

in the counties political seen, and security

imbalance could affect the future expansions plans as
well as MENA cable operations.

Orascom Telecom Media & Technology

(OTMT.CA)

Egypt | Telecoms

Re-Initiation of Coverage
FINANCIAL
SUMMARY
(Figures in
EGP million))

April 23, 2015

Income Statement
Revenue

2013a
2,471

2014a
2,707

2015f
3,301

2016f
3,642

2017f
3,889

Growth

12.1%

9.5%

22.0%

10.3%

6.8%

COGS

436

540

679

771

838

S,G & Admin. Expenses

Other Provisions

123
176

130
151

44
132

46
146

46
156

EBITDA

1,735

1,886

2,447

2,679

2,850

Growth

90.3%

8.7%

29.7%

9.5%

6.4%

EBITDA Margin

70%

70%

74%

74%

73%

Depreciation & Amortization

201

256

361

416

473

1,535

1,629

2,086

2,263

2,377

Interest Income

341

-340

99

143

145

Investment Income

-49

-50

Interest Expense

37

19

Non-Operating Income

Non-Operating Expenses

26

94

121

131

138

EBIT

Extra-Ordinary Items

-477

-447

1,203

Pre Tax Income

1,287

679

3,262

2,274

2,385

Income Tax
Effective Tax Rate

167
13%

415
61%

740
23%

576
25%

596
25%

Net Income

1,119

264

2,522

1,698

1,789

Growth

-78.9%

-108.6%

-3560.2%

-32.7%

5.4%

Profit Share to Employees & Board

Net Attributable Income - NAI

1,119

264

2,522

1,698

1,789

Growth
NPM

-78.9%

-108.6%

-3560.2%

-32.7%

5.4%

45.3%

9.8%

76.4%

46.6%

46.0%

Balance Sheet
Cash & Marketable Securities

2013a
4,245

2014a
5,387

2015f
8,875

2016f
10,490

2017f
12,258

459
4

100
2

424
2

467
3

499
3

Trade Receivables-Net
Inventory
Other Current Asset

87

140

149

164

175

Total Current Asset

Net Fixed Assets

4,794
1,359

5,628
1,922

9,449
2,220

11,123
2,521

12,935
2,805

Projects Under Implementation

1,220

171

128

90

58

642

592

Other Assets

1,922

1,889

518

518

518

Total Assets

9,937

10,203

12,315

14,252

16,316

Short Term Bank Debt

Accounts Payable

45
1,310

29
1,078

13
950

13
1,079

12
1,173

Other Current Liabilities

Total Current Liabilities

110
1,465

147
1,254

0
963

0
1,092

0
1,185

16
593

15
638

14
770

12
916

11
1,072

Other Non Current Liabilities

Total Shareholders' Equity
Total Liab.& Shareholders' Equity

1,136
6,727
9,937

1,772
6,523
10,203

1,901
8,667
12,315

2,122
10,110
14,252

2,417
11,630
16,316

Free Cash Flow Statement

NOPLAT
Non-Cash Items

2013a
1,545
201

2014a
1,016
256

2015f
1,657
361

2016f
1,798
416

2017f
1,899
473

Gross Cash Flow

Change in Operating Working Capital

1,746
510

1,272
99

2,018
-649

2,215
46

2,372
34

-231

230

-615

-679

-725

2,025

1,601

753

1,582

1,681

Subsidiaries & Other Long Term Investments

Long-Term Debt
Provisions

Capital Expenditure
Free Cash Flow Excluding Goodwill
Investment in Goodwill, Intangibles & and Adjustment
Free Cash Flow Including Goodwill

51

-112

2,076

1,489

753

1,582

1,681

Source: OTMT financials & Prime Estimates

Prime Research

10

Orascom Telecom Media & Technology

(OTMT.CA)
Re-Initiation of Coverage

Egypt | Telecoms

April 23, 2015

Stock Recommendation Guidelines

Recommendation

Target-to-Market Price (x)

Strong Buy

x > 25%

Buy

15% < x <25%

Accumulate

5%< x <15%

Hold

-5% < x < 5%

Reduce

-15% < x < -5%

Sell

-25% < x < -15%

Strong Sell

x < -25%

Investment Grade

Explanation

Growth

3 Yr. Earnings CAGR > 20%

Value

Equity Positioned Within Maturity Stage of Cycle

Income

Upcoming Dividend Yield > Average LCY IBOR

Speculative

Quality Earnings Reflect Above Normal Risk Factor

Prime Research

11

Orascom Telecom Media & Technology

(OTMT.CA)
Re-Initiation of Coverage

Egypt | Telecoms

April 23, 2015

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Prime Research

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