National Bank of Kuwait said it has increased its 12-month fair value for Global Telecom Holding - GTH by 3% to $3.60 from its previous $3.50 target following the successful close of the Algeria deal.  

NBK noted that its new fair value suggests a 29% upside from the latest close; hence, it upgraded its recommendation to Buy.

GTH announced the closing of the sale of a 51% stake in its Algerian subsidiary early February. VimpelCom and GTH announced the successful sale of GTH’s 51% stake in Omnium Telecom Algeria (formerly known as Orascom Telecom Algeria [OTA] and Djezzy) to the Algerian National Investment Fund (Fonds National d’Investissement [FNI]) for $2.6 billion, stated NBK.

NBK pointed out that GTH used the proceeds to repay shareholder loans to VimpelCom. The total net proceeds, amounting to approximately $3.8 billion, were used to pay down existing shareholder loans provided by VimpelCom to GTH. Based on the latest available information, GTH’s total outstanding shareholder loan is around $5 billion. Therefore, with the payment of the $3.8 billion, the outstanding shareholder loan should fall to around $1 billion.

NBK expects Djezzy to bear fruit faster than it initially expected. With the successful close of the deal, NBK expects Djezzy to deploy its 3G network aggressively to catch-up with its competitors in the market. With a faster network rollout than it initially anticipated, NBK expects to see revenue growth recovering and EBITDA margins stabilizing at a quicker rate

NBK said it has reiterated its positive outlook post the sale, in addition to keeping its view that the deal is a positive step towards achieving a better working environment for Djezzy as the Algerian government has a stake in the company.