Credit Suisse upgraded landline monopoly Telecom Egypt to "outperform" from "neutral," and said it sees strong wireline revenue in 2011 as a result of the surge in internet use in Egypt following the recent revolution.
Wireline revenue was resilient in the first quarter and appear set to remain robust this year due to the increase in international capacity sales as well as continued capacity investment by mobile operators and internet service providers, Credit Suisse said.
In addition, Telecom Egypt's shares appear too cheap at current levels and represent a relatively defensive investment in a volatile Egyptian market, the brokerage said.
It, however, cut its price target on the stock to 16.5 Egyptian pounds from 17 Egyptian pounds to reflect higher market risks following the recent anti-government protests.
Telecom companies including Vodafone Egypt were forced to cut their lines during the height of the protests that unseated veteran President Hosni Mubarak on 11February. Telecom Egypt owns a 45 percent stake in British operator Vodafone's local unit.
