JORDAN TELECOM DEBUTS ON AMMAN STOCK EXCHANGE

UNCLAS SECTION 01 OF 02 AMMAN 006586

SIPDIS

SENSITIVE

DEPT PASS USAID FOR ANE/MEA KIM FINAN
USDOC FOR 4520/ITA/MAC/ONE/PAUL THANOS
USDOC FOR 6000/ADVOCACY CENTER/CJAMES
USDOC FOR 6400/RSTEELE/ITA/TD/OEC/RSTEELE
TREASURY FOR MILLS, PIPATANAGUL
PASS OPIC FOR STEVE COWAN, ABED TARBUSH
EXIM BANK FOR BOSCO

E.O. 12958: N/A
TAGS: ECPS BEXP EINV JO
SUBJECT: JORDAN TELECOM DEBUTS ON AMMAN STOCK EXCHANGE

REF: A) AMMAN 2420 B) AMMAN 0567


1. (SBU) SUMMARY: Following a well-subscribed initial public
offering (IPO),Jordan Telecom (JTC) stock had its first day
of public trading on the Amman Stock Exchange (ASE) November

3. The listing made JTC the largest company on the ASE in
terms of operating capital, and placed the Amman bourse among
the largest in the Middle East. The success of the IPO,
which represented 10.5% of the company, has prompted the
government to consider selling another chunk of JTC stock,
and perhaps parts of the newly unbundled electric companies,
via IPOs as early as next year. END SUMMARY

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A CLEAR DEMONSTRATION OF INVESTORS' CONFIDENCE
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2. (U) Making good on its pledge to accelerate
privatization, the Government of Jordan put 15% of JTC,
amounting to 37.5 million shares, on the market October 9 via
an IPO, the first such offering of state assets to the
Jordanian public. Individuals or companies were able to
subscribe for a minimum of 100 shares, with a three percent
discount applied to the first 1000 shares purchased by
individual subscribers. There was no ceiling on the size of
investment, and the IPO was open to international and
domestic investors and institutions. On October 7, the
government announced that it set the price range at between
$3.25 and $3.75 per share, depending on demand. The
deadline for participation in the IPO, originally set at
October 23, was extended by one day. The final price per
share, announced October 28, was $3.35.


3. (U) According to figures issued by the Securities
Depository Center (SDC),26.2 million shares were bought,
resulting in gross privatization proceeds of $87 million.
Jordanian and Arab individual purchases accounted for
approximately 6.7 million of the shares, with 27,000 going to
ten foreign subscribers. The SDC said that 49 Jordanian
institutions and 6 Arab entities purchased the rest, with the
Social Security Corporation buying the bulk of it at 5%.
Although the IPO represented only 10.5% of JT, Finance
Minister Michel Marto termed the IPO a success and called it
"a clear demonstration of investors' confidence in our
economic reforms and privatization program". As part of the
offer, JTC announced that shares would be listed on the ASE
beginning November 4, with an opening price of $3.50.


4. (U) Following the sale, the government's stake in JTC is
41.5%, France Telecom's remains 40%, the Social Security
Corporation's rises to 12%, with the remaining one percent
owned by the Jordan Telecom Employees' Provident Fund.

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A STAR IS BORN?
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5. (U) Closing at $3.43, slightly below its opening price,
JTC shares made their debut as scheduled. The listing of JTC
on the ASE made it the second-highest ranked company (out of
157) on the bourse in terms of market capitalization at
$821.8 million, and increased the market capitalization of
the Exchange by more than 10%, making the ASE one of the
largest bourses in the region. A total of 56,000 shares
changed hands the first day. As of close of business
November 6, another 49,000 shares had been traded, with the
stock rising to $3.50 at the closing bell.

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IMPORTANT TO KEEP UP THE MOMENTUM
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6. (SBU) In a briefing given to econoffs on the progress of
privatization (SEPTEL),Adel Al-Kodah, Chairman of the
Executive Privatization Commission, said that it was
"important to keep up the momentum" generated by the IPO. He
said that the Commission was planning to offer shares in the
electricity generation and distribution companies via an IPO
some time next year. He added that the government would
offer the next tranche of another 10 to 15% of its stock in
JTC through an IPO next year.

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COMMENT
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7. (SBU) With the pressure of the impact of new entrants
into the telecom market on the IPO and share prices behind
it, JTC may now be able to view the Real Time fiber-optic
cable project a bit more favorably (REF B). Be that as it
may, with global interest in telecom stocks limited due to
the downturn in the sector in general and regional unrest
making foreign investors chary, the government can consider
the JTC IPO a success. Providing investment opportunities
for day-to-day investors in a sound company such as JTC marks
specific progress in economic reform and capital market
expansion. It also emphasizes the Jordanian Government's
commitment to move ahead on privatization, despite an
investment atmosphere that is far from ideal. End comment.


GNEHM