VZCZCXRO9287
RR RUEHWEB
DE RUEHEG #0629 1031054
ZNR UUUUU ZZH
R 131054Z APR 09
FM AMEMBASSY CAIRO
TO RUEHC/SECSTATE WASHDC 2185
INFO RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS CAIRO 000629 
 
SIPDIS 
 
STATE FOR NEA/ELA 
 
E.O. 12958:  N/A 
TAGS: ECON EINV EFIN ETRD PGOV EG
SUBJECT:  EGYPT'S ECONOMY:  APRIL 13 WEEKLY PRESS ROUND-UP 
¶1. (U) The following are notable economic news stories that appeared 
over the past week in the Egyptian press: 
 
------------------ 
Inflation Declines 
------------------ 
 
¶2. (U) According to the Egyptian government's official statistics 
agency, the Central Agency for Public Mobilization and Statistics 
(CAPMAS), urban inflation declined to 12.1 percent on a year to year 
basis in March. Annual food inflation dropped as well, registering 
12.8 percent in March, compared to 14.4 percent in February. (Al 
Alam Al Yom, 4/9/09) 
 
---------------------------- 
Upper Egypt- Red Sea Highway 
---------------------------- 
 
¶3. (U) Minister of Transport Mohamed Mansour and Minister of 
Investment Mahmoud Mohieddin announced that the inauguration of the 
first phase of the Upper Egypt- Red Sea highway (from Sohag to 
Safaga) will take place in September 2009.  Seventy-five percent of 
the LE 1.3 billion (US$231 million) project has been completed.  The 
second phase of the project will include doubling the road width to 
34 meters.  The project is one of Egypt's "mega projects," and is 
meant to lead to the development of 11 agricultural investment zones 
in the governorates of Assiut, Sohag and the Red Sea with a total 
area of 55 thousand feddans (57,090 acres).  (Ahram and Akhbar, 
4/8/09) 
 
---------------------- 
GPS Legalized in Egypt 
---------------------- 
 
¶4. (U) President Mubarak met with the Ministers of 
Telecommunication, Defense, and Interior. Following the meeting, the 
Minister of Telecommunication indicated that the government has 
approved the use of the GPS applications in mobile phones and in 
limousines.  (All newspapers, 4/7/09) 
 
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Chinese to Build Gulf of Suez Economic Zone 
------------------------------------------- 
 
¶5. (U) EgyptQTEDA, a Chinese company, won the international tender 
for the development of the economic zone northwest of Gulf of Suez. 
The company will develop about six square kilometers in the first 
phase (of a total allocated area of 20 square kilometers).  During 
the first phase, the company will invest US$49 million. Minister of 
Investment Mahmoud Mohieddin said that this economic zone would lead 
to the development of 150 industrial projects and would generate 
about 40,000 jobs. (Al Akhbar, 4/6/09) 
 
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Telecom 
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¶6. (U) After an international arbitration court ruled in favor of 
France Telecom's (FT) offer to buy Mobinil, Egypt's largest wireless 
operator, Egypt's Capital Market Authority (CMA) has blocked the 
tender offer submitted by France Telecom (FT) to buy up the 
remaining Mobinil shares.  The Arbitration Court of the 
International Chamber of Commerce decided that Orascom Telecom (OT) 
must sell its shares in Mobinil to FT.  FT already owned about 36% 
percent of Mobinil, and under the arbitration ruling FT would 
acquire OT's 14% stake.  The deal was estimated at US$1.7 billion. 
Under Egyptian law, FT is now required to offer to purchase the 
remaining shares (which are traded on the stock exchange) at the 
same price that is being offered to OT.  FT has offered less, and 
hence the CMA has blocked the deal.  Mobinil has more than 20 
million subscribers. 
 
¶7. (U) Reports indicated that the tender offer submitted by FT to 
buy out minority shareholders for LE 187 (US$33.20) per share, 33% 
higher than its current level, was far short of what was fair to 
shareholders.  In a statement released Tuesday, FT said it "regrets" 
that the CMA rejected its proposal.  "In the current circumstances, 
France Telecom considers it is not obliged by law or by market 
practice to launch a mandatory buyout offer," FT said.  The CMA said 
that the tender offer submitted by FT was "far removed" from the 
share price cited by the arbitration court. As a result, "the 
authority has decided to reject the mandatory tender offer because 
it conflicts with the principles of equality" among shareholders. 
(All newspapers, 4/7/09) 
 
SCOBEY