Wataniya shares ring in a solid debut

Wataniya, the Palestinian Territories' telecommunications operator, yesterday began the first day of its listing as the second-largest company in the country by market capitalisation.

The mobile phone operator closed down 4.8 per cent to US$1.37 on the Palestine Exchange after opening at $1.40. But that was still an improvement on the $1.30 listing price targeted for the company's initial public offering (IPO) in November.

It was one of the most actively traded stocks by volume on the bourse, with almost 3 million shares changing hands. That compared with 31,305 shares being traded on PalTel, the first mobile phone operator in the Palestinian Territories, which up until Wataniya's launch in 2009, had the monopoly on the sector.

Wataniya, 53 per cent owned by Qatar Telecom and 47 per cent owned by the Palestine Investment Fund, offered 38.7 million shares, and raised US$50.3 million (Dh184.75m). It was one-and-a-half times oversubscribed, with most investor interest coming from the domestic market. "The valuation was pretty much spot on, which meant that something was left on the table for the aftermarket," said Andrew Tarbuck, a corporate partner at the international law firm Latham and Watkins in Dubai, which was involved in the IPO.

He said the investor demand demonstrated "there is life in the Middle East markets" and would improve liquidity in the Palestinian Territories' capital market.

Telecoms is typically a desirable sector for market players to invest in because of the growth potential and rapid development of operators.

The Palestinian Territories has one of the lowest mobile penetration rates in the Middle East. Coupled with its high literacy rates and a young population, industry experts are largely bullish on its growth potential. "Before the IPO, people said it might not be covered because there's not enough liquidity in the market and the market is not ready for an IPO as big as this. But, all in all, it was a successful introduction," said Ahmad Aweidah, the chief executive of the Palestine Exchange.

There are 41 listed companies on the Palestinian Territories' exchange, but underdeveloped rules and regulations that are out of line with more mature US and European capital markets have hobbled other international IPOs.

Wataniya's listing was the largest international IPO in the country for 10 years, but the company is still a minnow in the regional telecoms sector.

"If you look at its market capitalisation, it is very, very small," said Irfan Ellam, a telecoms analyst at Al Mal Securities.

Based on its closing price yesterday, Wataniya has a market capitalisation of $350m, but compared with the Middle East's telecoms giants, it is not huge.

Etisalat is the largest company by market capitalisation in the UAE at $23 billion. Saudi Telecom, another big player in the sector, has a market capitalisation of $22bn.

Mr Ellam said the Wataniya stock was unlikely to attract major international investors because of its size.

The listing represents 15 per cent of the company. Wataniya is required to list another 15 per cent of the company to comply with the Palestinian regulator, the Capital Market Authority, but there is no fixed date for this.

fhalime@thenational.ae