Business

CAIRO — As Egypt’s mobile operators thrive, state-owned Telecom Egypt is entering the market in an effort to boost state revenues.

In a country with more mobile phone subscriptions than residents, Egypt’s only fixed-line operator is hoping to get in on the action with its new mobile service, WE.

But some established players say they fear the state-owned firm, which already owns 45 per cent of top existing operator Vodafone Egypt, will enjoy unfair advantages.

Egypt, with around 96 million residents, had nearly 100 million mobile subscriptions in 2016, according to a July report by the National Telecom Regulatory Authority.

That compares with fewer than 10 million subscriptions for land lines and DSL phone line-based internet services.

As the mobile sector booms, Telecom Egypt’s entry into the market aims to introduce competition, the NTRA said in a report.

That could upgrade “the quality of services provided... at more affordable prices”, it said, adding that it hoped to boost state revenues and create new jobs.

Within a month of its September launch, WE has attracted a million customers. But its polished advertisements may not be the only reason for its success.

It entered the sector at an opportune time, the same month as the official launch of 4G mobile internet services, repeatedly delayed by the government.

Also in September, the NTRA announced it would enforce a 30 per cent increase in prices for mobile services — from which Telecom Egypt’s offering would be exempt.

While the price hike was sudden, it met repeated demands by Vodafone, Orange, and Etisalat, which have objected to being forced to freeze prices despite 30 per cent inflation as the Egyptian pound dived against the dollar following its flotation in November 2016.

Temporary privileges

But some fear Telecom Egypt’s exemption from the hike may be part of a broader pattern of unfair privileges.

Orange Egypt has invested some 15 billion pounds (around 730 million euros, $850 million) in its 4G services.

“It is a big responsibility for the government to ensure that competition regulations are implemented in an equitable manner,” said Jean-Marc Harion, Orange Egypt’s chief executive officer.

Such rules “have not always been respected in the field of telecoms”, he said.

But Telecom Egypt says its entry into the mobile market was inevitable and should not be surprising in the age of smart phones.

“It’s a matter of life and death,” said CEO Ahmed El Beheiry.

“Over time people will give up on fixed internet and move to the mobile.”

Critics have argued that Telecom Egypt’s ownership of 45 per cent of Vodafone Egypt constitutes a conflict of interest.

But Beheiry denied any government favouritism towards his firm, adding that its rivals are anything but “weak, small players”. 

“There is no more difficult terrain than this in which we are entering,” he said.

Telecom Egypt argues that its countrywide landline and DSL coverage is a major asset.

But analyst Ahmed Adel of the investment bank Beltone Financial said the firm’s landline monopoly constitutes “a big challenge because of the number of complaints over the quality of these fixed services”.

Telecom Egypt currently relies on Etisalat Misr’s mobile network as it develops its own.

The company will eventually have to show “its ability to acquire a market share in the absence of any operational advantage”, he added.

Mostafa Abdel-Wahed, regulator NTRA’s executive chairman, did not respond to repeated requests for an interview.

In an emailed response to questions, the NTRA said “the entry of the fourth mobile operator helps to increase competition between companies to benefit the citizens in terms of quality of services and prices”.

It added that it “treats all companies equally without distinction”.

AMMAN — His Majesty King Abdullah met on Tuesday with a delegation, comprising executives of Japan’s Toshiba Corporation, specialised in manufacturing flash memory chips, according to the Jordan News Agency, Petra. 

The visiting delegation is participating in the World Science Forum 2017, held at the shores of the Dead Sea. 

At the meeting, the company’s representatives expressed their business intention to extend training to promising and qualified Jordanians as they reviewed the Kingdom’s recourses, including human resources and favourable investment environment in the field of information and communications technology (ICT), transforming the country into a regional ICT hub. 

The meeting also addressed the Kingdom’s plans to expand the sector. Yesterday’s meeting was attended by the King’s Office Director Jaafar Hassan and Japan’s Ambassador to Jordan Shuichi Sakurai. 

The World Science Forum 2017, which will run through November 11, began on Monday under the title “Science for Peace”. The five-day event, which is the largest scientific event in the region, held at the King Hussein Bin Talal Convention Centre at the Dead Sea, seeks to address the challenges of growth, stability and world peace. The forum was first established in Hungary in 2003, in cooperation with UNESCO.  

BRUSSELS — The European Central Bank (ECB) fears that international banks based in London are overly relying on “empty shell” units to continue working in Europe after Brexit, while keeping key services in the UK capital, sources said on Monday.

The ECB’s chief supervisor Daniele Nouy voiced her concern to a meeting of eurozone ministers in Brussels, with the effects of Britain’s divorce from the European Union becoming a major worry.

According to sources familiar with the matter, Nouy sounded an alarm that global banks are setting up headquarters on the European continent in name only, while keeping most operations still standing in London. 

This is a huge issue as the UK tries to hold onto the dominance of its London financial hub despite Brexit, all while Frankfurt, Paris and Dublin strive to take advantage of Britain’s euro-divorce.

London, for its part, is fretting while big banks sound out regulators in different EU nations as they look for a new base to do business in Europe once Britain leaves.

If Britain goes ahead with a so-called “hard Brexit”, in which the UK loses all special ties to the EU, banks based in London will lose the “passports” that allow them to do business out of the UK across the remaining 27 members of the bloc.

Instead, to continue operating in Europe, financial firms will have to set up new business headquarters in EU countries.

Frankfurt has already claimed some major financial players as a post-Brexit headquarters, including US investment bank Morgan Stanley and Japanese giants Sumitomo Mitsui Financial Group, Daiwa Securities and Nomura. 

Goldman Sachs Chief Executive Lloyd Blankfein last month caused a firestorm on twitter, touting Frankfurt’s “great” weather among other attributes, but stopped short of naming the German city as a post-Brexit headquarters.

Some 10,000 UK financial services jobs could move abroad on the first day of Brexit, the Bank of England predicted on Wednesday.

DUBAI — A purge of Saudi Arabia’s political and business elites briefly dragged down the kingdom’s stock market on Sunday but prices recovered to close higher as some investors bet the crackdown could bolster reforms in the long run.

The size of the purge — 11 princes, four ministers and tens of former ministers were detained by a newly created anti-corruption committee headed by Crown Prince Mohammed Bin Salman — raised questions about the stability and predictability of the Saudi government. 

For foreigners, a major shock was the detention of billionaire Prince Al Waleed Bin Talal, who as a big investor in top Western companies such as Citigroup is known as the international face of Saudi business.

Local investors, meanwhile, worried about whether a sustained investigation into corruption could turn up scandals in the kingdom’s opaque business world, forcing people implicated to sell off their equity holdings.

But many bankers and analysts saw the purge, which replaced the head of the National Guard, as a power grab by Prince Mohammed, designed to remove any remaining obstacles to his authority and assure his eventual succession to the throne. This, they said, could help the economy by making it easier for Prince Mohammed to pursue radical reforms that include slashing the state budget deficit, putting more women into employment, lifting a ban on women driving, and selling $300 billion of state assets.

“This is the latest act of concentration of power in Saudi,” said Hasnain Malik, global head of equity research at emerging markets investment bank Exotix.

“As unprecedented and controversial as it may be, this centralisation might also be a necessary condition for pushing the austerity and transformation agenda, the benefits of which very few investors are pricing in.”

After initially tumbling as much as 2.2 per cent on Sunday, the Saudi stock index rebounded to close slightly higher. Shares related to some of the detained people, such as Prince Al Waleed’s Kingdom Holding, sank but most banks rose, a sign of economic optimism.

Instability

The purge may increase Prince Mohammed’s grassroots support by tackling corruption, a problem that has long plagued the economy.

A danger for financial markets, however, is that Prince Mohammed is shaking up business practices and ties that have lasted for decades, a move which could backfire if it triggers an exodus of money and wealthy individuals from the country.

Many corporate executives expect Prince Mohammed to persuade or pressure rich Saudis to repatriate some of the billions of dollars which they are believed to have transferred overseas for safe-keeping, and which could now help to kick-start the development projects that he plans. 

The corruption crackdown may be an initial step in this effort; the decree creating the committee gave it the right, pending the result of investigations, to seize assets at home or abroad and transfer them to the state Treasury.

James Dorsey, senior fellow at Singapore’s S. Rajaratnam School of International Studies, wrote that Prince Mohammed appeared to be reacting to growing opposition within the royal family and the military to his reforms and Riyadh’s military intervention in Yemen.

“It raises questions about the reform process that increasingly is based on a unilateral rather than a consensual rewriting of the kingdom’s social contract.”

For many people, however, a unilateral approach is seen as the best chance to push through the reforms. A chief economist at a big regional bank said Prince Mohammed’s main motive for acting was frustration that reforms were not moving fast enough.

The privatisation programme, for example, including the planned sale of 5 per cent of national oil giant Saudi Aramco, has been discussed for many months with little action. Now the programme may pick up.

“The message this should send to foreign investors is it’s unwise to bet against MbS,” said Sam Blatteis, chief executive of regional advisory firm The MENA Catalysts, using a common abbreviation of Prince Mohammed’s name.

“When he wants to get things done, he has proven that he can. This is not a consolidation of power, it’s an acceleration. The wheels of policymaking are moving faster.”

Apple Inc.’s shares rose to a record high on Friday as more analysts set a trillion-dollar valuation on the company, following a blowout fourth quarter and an upbeat forecast that quashed investor concerns around the iPhone X.

The stock rose as much as 3.7 per cent to $174.26, briefly breaching $900 billion in market value, amid declines in the broader market. The gains added nearly $32 billion to the company’s market capitalisation.

The Cupertino, California-based company also forecast a strong holiday quarter ahead, which will include the iPhone X that started selling on November 3.

“We see iPhone X unlocking pent-up iPhone upgrades, especially in China, driving more than 20 per cent iPhone unit growth and a revenue and earnings beat in 2018,” analyst Katy Huberty on Morgan Stanley said.

The glass-and-steel $999 phone appeared to have brought back the frenzy associated with iPhone launches — long lines formed outside Apple stores across the world as fans flocked to buy the new phone.

The company will make 30 million iPhone X units during the current quarter, Nomura Instinet analysts estimated, allaying production worries related to the phone.

IPhone X’s launch follows weeks of concerns among analysts about the production of the phone, which for the first time includes new facial identification software to replace the fingerprint used on previous phones.

Apple said on Thursday it expects first-quarter revenue of $84 billion to $87 billion, at the high end of analysts’ average expectation of $84.18 billion, according to Thomson Reuters I/B/E/S.

“We — and many others — had feared that guidance could be weaker, reflecting only 9 weeks of the flagship iPhone X and limitations on supply,” Bernstein analyst Toni Sacconaghi said.

At least 13 brokerages raised their price targets on the stock, with Citigroup making the most bullish move by raising its price target by $30 to $200.

Of the 37 analysts that track the stock, as per Thomson Reuters data, 31 had a “buy”, or higher rating. None had a “sell”.

With the latest brokerage actions, at least nine Wall Street analysts now have target prices that put Apple’s market value above $1 trillion. Drexel Hamilton’s Brian White is still the most bullish among Apple analysts tracked by Thomson Reuters, raising his target price further to $235.

Apple’s fourth-quarter results underscored the company’s ability to drive growth not just on iPhones, but across its range of products, analysts said.

The company’s suite now includes five different iPhone models, the iPad, the Mac and the Apple Watch as well as its fast-growing services.

Apple said it sold 46.7 million iPhones in the fourth quarter ended September 30, above analysts’ estimates of 46.4 million, according to financial data and analytics firm FactSet. Mac and iPad sales too were above the estimates of most analysts.

TOKYO — Japan’s Fujitsu said on Thursday it had agreed to merge its struggling PC business with Lenovo, giving the Chinese computer giant a controlling share of the business.

Tokyo-based Fujitsu said it had “decided to formally sign a deal” with Lenovo, the world’s largest PC maker, and the government-backed Development Bank of Japan (DBJ) on a “strategic partnership” to develop and sell PCs.

Lenovo will hold 51 per cent of the shares in Fujitsu’s PC subsidiary, while the DBJ will hold 5 per cent, Fujitsu said in a statement.

The deal should allow Fujitsu to pour more resources into its profitable IT services operations, while also pushing ahead with a sweeping restructuring programme that will see 3,200 job cuts.

The decision came after Fujitsu said last month it was in talks with Lenovo over a potential deal, which pushed Fujitsu shares up by 7.8 per cent.

After the announcement however, Fujitsu shares were trading down 2.44 per cent at 874.1 yen.

The company had been in talks with Toshiba and Vaio to merge their once high-flying personal computer businesses, but those negotiations failed to result in a deal.

Once-mighty Japanese firms have struggled in the face of stiff competition from lower-cost rivals overseas, including in China and South Korea.

DUBAI — African officials, including four heads of state, convened with international CEOs at a summit on Wednesday in Dubai, part of its push to position itself as a link for huge potential investments on the continent.

“We are looking at the fastest growing economy of the world ... Six out of the top 10 fastest growing economies are just next to us in Africa,” said the president and CEO of the Dubai Chamber of Commerce and Industry, Hamad Buamim.

Experts at the opening of “Next Generation Africa”, Dubai’s fourth Global Business Forum on Africa, said the continent’s 54 countries — home to a fifth of the world’s population — require tens of billions of dollars in investment in infrastructure, energy and other sectors. 

Investment, Emirati officials hope, will be channelled through Dubai, a trading hub and member of the United Arab Emirates.

“We believe that Dubai’s strategic goals can be aligned with Africa’s ambitions as it enters a new phase of development,” said the Dubai chamber chairman, Majid Saif Al Ghurair. 

The number of African companies registered in Dubai jumped to 17,000 last year, an increase of 41 per cent from 2015, according to Ghurair.

Trade volume between UAE and Africa totals around $35 billion and has been growing at a double-digit rate annually.

“We see potential of a growing economy that has a lot of future ... Africa is a great market,” Buamim told AFP on the sidelines of the two-day forum that has attracted four heads of state from Africa, several ministers and hundreds of investors and experts.

He said the forum is held to help channel investments to Africa through Dubai.

Rwandan President Paul Kagame told the meeting that Africa is witnessing speedy reforms and a faster pace of integration, especially among a number of regional economic blocs formed in the continent.

“A number of steps have been taken and progress has been made ... In the next five to 10 years, we will see progress,” in the integration between the various economic blocs, Kagame said.

The president said a number of economic unity initiatives had been adopted in Africa in the fields of customs unions, infrastructure projects, electricity links and railway networks.

“Later on, the regional economic communities will join together ... integration is happening,” said Kagame, as he called for greater investment inflow into Africa.

The Infrastructure Consortium for Africa (ICA) said last month the continent must double its spending on infrastructure over coming years after a decline in 2016.

Last year, total investment in transport, energy, water and IT/communications amounted to $62.5 billion, down from $78.9 billion in 2015, it said.

Investments worth between $120 billion and $140 billion is needed in the short-term, said the report.

AMMAN — Royal Jordanian (RJ) posted JD31.8 million in net profit in this year’s third quarter against JD12.9 million net profit in the same period last year, RJ’s President/CEO Stefan Pichler said on Tuesday.

Pichler was speaking at a press conference on Tuesday during which he presented the national carrier’s turnaround plan which was approved by RJ’s Board of Directors during its session on Monday.

RJ’s finances have started to recover since the beginning of June, which marked the start of the company achieving first monthly net profit in 2017, he said. 

He noted that the net income increased exponentially in the following months, enabling RJ to cover the JD27.8 million losses, incurred in the first five months of the year.

According to Pichler, RJ’s strategic objective is to position itself as the number 1 network carrier in the Levant.

This is based on three main pillars, foremost of which is sustainable profitability that attracts the capital market and targets increasing operating margins in the coming five years. 

The second pillar focuses on RJ being a consumer champion, by thinking of customers first and delivering a consistent customer experience across all touch points.

The third pillar is to see RJ become the employer of choice, attracting and retaining talented and skilled workforce, while providing the best training and career planning, and managing and rewarding performance.

Royal Jordanian will keep offering super-low fares to retain loyal customers and gain new ones who will also see improved services and a seamless travel experience, he said in the statement.

Royal Jordanian will open new international routes in the coming five years, to Washington, Copenhagen, Stockholm and Kyrenia, in Cyprus, and will resume flying on previously suspended routes, including Damascus, Mosul, Sanaa, Aden and Benghazi, he noted.

In terms of its fleet, the company will merge into a single supplier for all the narrow body fleet from currently two aircraft manufacturers, considerably reducing expenses on maintenance, spare parts and training. 

Additionally, the airline will add more Economy Class seats in its narrow-body planes, and thus increase the earning capacity, by cutting down the number of Crown Class seats while keeping the comfortable pitch of both classes’ seats. This move will generate more revenues for RJ.  

Pichler noted that today’s fleet of 26 aircraft will grow gradually to reach 30 by 2021; seven of them will be the currently operating 787s.

Under the turnaround plan, Royal Jordanian will exert more effort to boost its presence in Aqaba, in cooperation with the Aqaba Special Economic Zone Authority and local tourism entities, with the objective of increasing traffic to the coastal city from several countries around the world, he added.

This will lead to supporting the economy and bringing in more revenues for the airline. He voiced hope “that the Aqaba authorities as well as business community will support us to the same degree we want to support them and to the best of our economy”.

He said that the five-year plan will include major initiatives that are expected to enhance unit revenues by 7 per cent and lower unit costs by 6 per cent

TOKYO — Nintendo nearly doubled its full-year profit forecast on Monday as it pointed to sizzling sales of its Switch games console and a cheaper yen for the upbeat outlook.

The Kyoto-based video game giant said it now expects net profit to be 85 billion yen ($748 million) for the fiscal year to March 2018, well up from an earlier estimate of 45 billion yen.

Nintendo also boosted its sales projection for Switch, which was launched in March with a price tag of $300 and is seen as a new pillar for the company’s earnings.

The company said it expects to sell around 14 million Switch consoles in the current business year, up from an earlier 10 million forecast.

Switch, capable at home and on the go, blends Nintendo’s console and handheld device business with its fledgling mobile gaming strategy, which got a big brand win with Pokemon Go’s success in the summer of 2016.

During the April-September period, the company launched several headline game titles for Switch, including “Mario Kart 8 Deluxe” and its popular “Splatoon2”.

Its “Super Mario Odyssey”, which was released last week, is also expected to increase sales for the second half, the firm said.