By Alastair Sharp
CAIRO, Aug 5 (Reuters) - The protracted ownership row clouding Egyptian mobile operator Mobinil is likely to deflate its share price in coming months as investors give up hope of a positive resolution, analysts say.
Mobinil, Egypt's largest mobile operator by subscribers, is caught in a dispute between its two main shareholders, Cairo-based regional operator Orascom Telecom and France Telecom, that has included court arbitration and regulator rulings.
"We believe the case will continue to drag on, and Mobinil's share price will start losing upward momentum," EFG-Hermes analyst Marise Ananian wrote on Wednesday after FT lost an appeal against regulator rejection of a buyout offer.
The two heavyweights, who together own a controlling stake in Mobinil, have gone through years of arbitration resulting in a ruling that Orascom should sell its 28.75 percent stake in their joint holding company to FT for 273 Egyptian pounds ($49). Orascom also owns a 20 percent direct stake in Mobinil.
Mobinil shares jumped from 148 pounds to 215 pounds in the two days after news of the ruling hit the market in April.
Although that transaction has not proceeded as the firms fight regulatory battles over minority shares, the stock remains buoyant, trading broadly within the 185 and 220 pound range.
"The share price has been consistently not reacting in a rational way to the rejections made by the regulator, because investors are still hoping a tender offer could be accepted in the future," said Sally Gerges from Beltone, which is neutral on the stock and gives it a fair value of 206 pounds.
On Tuesday, an Egyptian appeal committee ruled against a France Telecom appeal over the rejection of its second of three bids, upholding the regulator's decision to block the sale due to a lack of shareholder equality.
Mobinil's shares dipped 4 percent in late trade on Tuesday and stabilised on Wednesday at 211 pounds, still 42 percent above the pre-ruling price of roughly 150 pounds.
Analysts saw value in Mobinil's second-quarter financial results, posted in late July, noting promotions that have lifted "on-net" traffic and strong subscriber growth.
But while Orascom chairman Naguib Sawiris has said the dispute has not soured working relations between Mobinil executives, analysts say this bonhomie is unlikely to last.
"We are concerned that the dispute will affect the operations of Mobinil in the medium to long term," Gerges said.
Analysts say executives from both Orascom and FT need to agree on issues relating to Mobinil's overall strategy, budget, marketing, promotions and distribution of dividends.
"If this dispute continues, the approval of such strategic decisions for Mobinil in the future might be affected," Gerges said. (Editing by Rupert Winchester)