By IBA- Archives Shaking up the cement industry The Nation In Brief The Nation in Brief Highlights from the business world Moving On, Cautiously The market makes gains, but investors are still jittery following the troubles of 2009 Much Ado About Nothing Business optimism rises as economic fears end up being overblown Mutually Assured Construction Financial crisis survivors Egypt and Poland increaseeconomic cooperation in a bid to temper reliance on the West By Omar Mohsen Alex Shalaby becomes chairman of Mobinil as Djezzy’s Kabbani moves over to be CEO of the Egyptian operator on September 1. By Courtsey CIB OPIC is expanding mortgage lending through CIB. By Courtsey Palm Hills Developmens Palm Hills Developments is seeing green in its mid-year financials. By Yosrey Aql Advertising guru Tarek Nour

By Jeff Neumann, James Chester, Ali El Bahnasawy, Rebecca Collard, Norhan Elhakeem, Ethar El Katatney

In a first-of-its-kind trial, 20 executives of Egypt-based cement companies have been found guilty of price fixing — violating Law no. 3 of 2005 on the Protection of Competition and Prohibition of Monopolistic Practices. Half the executives were Egyptian and the rest were foreign nationals, including Italian, Spanish and Portuguese. The trial began in February 2008, after Minister of Trade and Industry Rachid Mohamed Rachid approved the charges of anti-competitive practices against them in October 2007.

The companies, which include Suez Cement (headed by AmCham President Omar Mohanna), Al-Ameriyah Cement, Misr Beni Suef Cement, Misr Qena Cement and Tourah Cement have each been fined LE 10 million. According to local media, Judge Hisham Hamdy of the Nasr City Misdemeanors Court said that the businessmen had caused “deliberate harm to the national economy through practices like price-fixing, in violation of the law governing monopolies.”

The court heard evidence from the Egyptian Competition Authority (ECA), a department under the auspices of the Ministry of Trade and Industry, based on a 14-month investigation that found the companies were colluding to fix prices and had agreed to share out the market for Portland cement — the most common type used worldwide — in 2005 and 2006.

In a press statement, Rachid said that these penalties aim at correcting the way companies conduct their business, and are not meant to limit their industrial or investment activities. He added that the ruling will provide a better climate for serious investment in Egypt since it will increase competition. The defendants were all absent from the courtroom, though their lawyers said they would appeal the decision.

The companies’ shares dropped immediately after the court ruling. Shares in Suez Cement fell 3.76% to LE 35.86, while Sinai Cement dropped 4.04% to LE 46.55. Tourah Cement took the hardest hit, falling 9.28% to LE 108.35.

In February 2007, the government had imposed a heavy tariff of LE 65 per ton on exports, which it later increased to LE 85. Demand for cement in Egypt and abroad has surged and correspondingly cement prices went sky high this year, peaking at LE 555 per ton compared to LE 300 in early 2007. In March, the government decided to ban cement exports altogether and in the last week of August, the price of cement dropped LE 10 to sell for LE 485 per ton. The ban is due to be lifted in October.

The three-year-old anti-monopolies commission is now busy investigating another sector — steel — where prices have surged nearly 100% over the last year.

Telecom mogul Naguib Sawiris announced July 24 that he will be stepping down as chairman of Mobinil effective September 1. Taking Sawiris’ place as chairman will be Mobinil CEO Alex Shalaby, according to a company statement. The new CEO of Mobinil will be Hassan Kabbani, moving over from the same position at Mobinil parent company Orascom Telecom’s (OT) Algerian subsidiary, Djezzy.

Kabbani has run Djezzy since 2003 and before that worked for France Telecom. He will be replaced at Djezzy by Tamer El Mahdi, OT’s current chief technology officer, an industry veteran with more than 22 years of experience in the field.

Shalaby, tasked with filling Sawiris’ shoes, previously worked in public affairs for American telecom company AT&T, before moving to Mobinil in 1998. He served with the company as chief regulatory affairs officer from 1998 to 2005, and in November 2005 was promoted to CEO of Mobinil after the departure of founding CEO Osman Sultan, now CEO of du, Dubai’s second mobile operator.

In a company statement, Sawiris praised both Kabbani and El Mahdi by saying, “[Kabbani] has worked with us for a number of years and has been one of the key drivers of the success in OT [Algeria]. [Mahdi] has successfully accomplished the role of managing the technical integration between all our subsidiaries, providing the group with strong synergies and significant value creation.”

Apart from Mobinil, Orascom Telecom owns mobile operators in Algeria, Tunisia, Bangladesh, Zimbabwe and, most recently North Korea, making Orascom the biggest mobile operator in the Middle East and North Africa.

The US government agency Overseas Private Investment Corporation (OPIC) is providing $250 million (LE 1.34 billion) in financing for Commercial International Bank (CIB) to expand mortgage lending for lower-income homebuyers. CIB will loan 80% of the funds via local lenders to low-income customers, for house-purchases under $21,000 (LE 111,300). The remaining 20% will be loaned by CIB to middle-income buyers.

OPIC President and CEO Robert Mosbacher, Jr. said at the signing ceremony July 28 the project would create a “broad distribution system to finance the expansion of home ownership, stimulate new home construction, and in turn increase the wealth-building capacity of low- and middle-income families.” The ceremony was attended by ministerial officials and US Ambassador Margaret Scobey.

The benefits of mortgage financing in emerging markets are far reaching, according to OPIC. The agency stated in its Congressional Budget Request for FY2009 that, “mortgage-financed owner-occupied housing not only offers shelter and labor intensive jobs but also creates a platform for saving that can become the means to start a business.”

OPIC also funds microfinance initiatives and provides small business facilities to Egyptian small and medium enterprises (SMEs). This stimulation of economic activity, according to the report, “expands the pool of primary mortgages; helps create secondary markets; and brings the power of credit and global capital markets to financial institutions involved in housing, SME credit, and microfinance to dramatically improve the lives of the poor.”

Although mortgage lending in this country has increased significantly over the past five years, due to banking, mortgage and capital lending reforms, household debt to GDP ratio is still less than 10%, according to CIB Managing Director Hisham Ezz Al-Arab. By comparison, household debt to GDP ratio is pegged, alarmingly, at over 100% in a number of Western economies, including the US and UK.

OPIC, which also announced a $250 million mortgage lending program in Jordan, has been operating since 1971 and supports American policy abroad through investment of US private capital in emerging economies and providing support for US and domestic companies in managing FDI.

Alcatel-Lucent will build the 7,100-kilometer Atlantic-Mediterranean segment of the 15,000-kilometer Europe India Gateway network (EIG), the first direct high-bandwidth submarine cable network from the United Kingdom to India. Scheduled for completion in 2010, the network will have an ultimate capacity of 3.8 terabits. The cable is being constructed for a consortium of over 15 operators and will connect three continents, with landing points planned in the UK, Egypt, Portugal, Gibraltar, Monaco, France, Libya, Saudi Arabia, Djibouti, Oman, United Arab Emirates, and India.

The project aims to increase the number of routes for broadband traffic from Europe to India: Following the crippling January 30 collapse of the internet across Egypt and the MENA region, companies are demanding more safety backup options. EIG will also provide interconnection with other major cable systems connecting Europe, Africa, Asia and North America. Alcatel-Lucent’s portion of the overall $700 million (LE 3.76 billion) project is $290 million (LE 1.55 billion).

Palm Hills Developments (PHD) has issued its consolidated financial results for 1H2008. The company recorded LE 428.5 million in profits before tax in the first half of this year, compared with LE 20.6 million over the same period in 2007.

The results come as all existing projects — as well as the Bamboo Extension project — are beginning to generate profits. Other figures include an increase of 859% in consolidated net sales to stand at LE 765.9 million and an increase in total company assets to LE 7.6 billion (of which LE 3.7 billion was in development properties) from LE 5.7 billion.

Much of the company’s growth has been generated through contracts at Hacienda Bay, Casa, Bamboo Extension and Golf View. According to Reuters, PHD has a land bank of over 46.5 million square meters. It began trading on the EGX in June.

The Nation in Brief was written by Ali El Bahnasawy, James Chester, Rebecca Collard, Norhan Elhakeem, Tamer Hafez, Ethar El Katatney and Jeff Neumann.

The world’s two largest communication groups, Omnicom a

nd WPP, are currently locked in a bidding war to acquire a strategic stake in the Tarek Nour Group (TNG).

According to reports, bid documentation was approved by the Capital Market Authority for acquiring 49% of Tarek Nour Holdings (the local component of TNG) and its 15 subsidiary companies, all operating in the areas of advertising, media and marketing communication.

If completed, the deal would represent a first for the MENA region in both size and scope of business in the marketing communication field. Omnicom has a worldwide revenue of $12.69 billion (LE 67.89 billion), while WPP follows with $12.39 billion (LE 66.26 billion).

WPP, whose companies include Hill and Knowlton, as well as Burson Marsteller, is the world’s second-largest communication company. Omnicom’s DDB has a client list including the Egyptian Tourism Authority, Unilever and McDonalds. bt