Europe stocks struggle, overshadowed by Greece

MADRID (MarketWatch) — European stock markets pushed lower on Thursday, with banks out in front of the losses, amid a Spanish bond auction that showed rising borrowing costs, while persistent worries about Greece overshadowed the market, .

The Stoxx Europe 600 index XX:SXXP -1.05% extended an earlier fall, off 0.7% to 242.55, en route to a fourth-straight day of losses. Germany is observing a public holiday, though markets are open, while Swiss and most Nordic markets are closed for a holiday.
Click to Play
Stocks suffer fourth-straight drop

The Dow Jones Industrial Average fell for a fourth-straight day as confusion over Greece’s political future trumped firm U.S. economic data. Chris Dieterich has details on The News Hub. Photo: Reuters.

Stoxx and FTSE 100 index UK:UKX -1.38% heavyweight Vodafone Group PLC VOD -1.98% UK:VOD -.00% fell 1.3%. Chief Executive Marten Pieters said Thursday the company plans to list its Indian venture on a local exchange, but no date is set yet.

Spanish stocks came under pressure after data showed a 0.4% fall in gross domestic product in the first quarter on an annual basis.

As well, at an auction of shorter-dated bonds, the Spanish government raised its desired maximum amount, but had to pay much higher costs. Yields for the 10-year Spanish government bond ES:10YR_ESP +0.53% rose 2 basis points to 6.28%, according to FactSet Research. Read more on Spanish bond auction

The Spain IBEX 35 index XX:SXXP -1.05% fell nearly 2% to 6,487, led by a 4% tumble for BBVA SA BBVA -0.81% ES:BBVA -3.39% and a 3.3% fall for Banco Santander SA ES:SAN -2.52% STD -2.41% .

Markets remain unnerved by Greece contagion to Italy and Spain, said Nicolas Spiro, managing director of Spiro Sovereign Strategy. “The Greek crisis is placing huge strain on peripheral euro-zone bonds and European bank shares. Spain is on the sharp end of these fears,” he said in e-mailed comments.

“The Spanish government itself can do very little to shore up confidence in the near term. Unless there is a bold and decisive response on the part of the euro zone, sentiment towards Spain will deteriorate further. This is a very slippery slope right now,” said Spiro.

Added Atif Latif, director of trading at Guardian Stockbrokers, in e-mailed comments: “Market concern suggests that bank exposure seems to potentially be the main reason for the weakness and short-term performance will depend on the action from politicians that are now badly needed.

“There is some chatter on a collective central bank meeting to make a market statement on the best way to deal with this crisis,” he said.

The Athens General Index GR:GD -2.02% fell 1.7% to 545.99, while the FTSE MIB Italy index XX:FTSEMIB -2.03% dropped 2% to 12,994.70, with shares of UniCredit SpA IT:UCG -5.35% down 4.3%.

Yields on Italy’s 10-year government bonds IT:10YR_ITA +0.51% rose 11 basis points to 5.83%, according to FactSet.
Resources, banks slip

Markets were hoping for a bounce on Thursday owing to overseas factors. “With positive comment from the Federal Reserve overnight about further easing if required, plus Japan’s first-quarter GDP coming in at 4.1%, the performance of equities offered some hope to Europe,” said David Buik, markets commentator at BGC Partners, in e-mailed comments.

“But Greece came and took the wind out of its sails yet again and will continue to do so until attempts are made to crystallize the problems and deal with them,” said Buik.

The French CAC 40 index FR:PX1 -1.15% fell 0.9% to 3,021.45, with Credit Agricole SA FR:ACA -3.99% down 4.5% and Societe Generale SA FR:GLE -3.61% losing 3.9%.

The German DAX 30 index DX:DAX -0.94% fell 0.6% to 6,347.91, with Deutsche Bank AG DE:DBK -4.08% DB -1.86% down 2.5% and Allianz SE DE:ALV -2.81% dropping 1.8%.

The FTSE 100 index UK:UKX -1.38% fell 1% to 5,348.21, as Vodafone fell and banks and resource stocks came under pressure. Shares of BP PLC BP 0.00% UK:BP -1.45% lost 1%, while Royal Dutch Shell PLC RDS.B -0.33% UK:RDSB -1.73% fell more than 1%.

Miner Xstrata PLC UK:XTA -4.19% dropped 3.6%. UK:RDSB -1.73% UK:RDSB -1.73%

Barclays PLC UK:BARC -4.07% BCS +0.93% slid 4% and Standard Chartered PLC UK:STAN -2.71% dropped 2.2%.

Verizon posts loss but mobile impresses

(Reuters) – Verizon Communications (VZ.N) posted a quarterly loss due to a $2.3-billion charge for job cuts but wireless customer growth and landline profit margins were better than some analysts expected.

The company’s shares rose 3.7 percent after growth in valuable monthly bill-paying wireless customers came in ahead of expectations.

Verizon Wireless, a venture between Verizon and Vodafone Group Plc (VOD.L), added 665,000 postpaid subscribers compared with the average expectation for 570,000 from eight analysts contacted by Reuters.

“On the surface it appears things are going in the right direction.” said Piper Jaffray analyst Chris Larsen. Cost cuts appeared to help profit margins for the company’s landline business more than expected, he added.

Larsen said landline profit margins of 22.7 percent compared to his expectation for 22 percent.

Verizon posted a second-quarter loss of $198 million, or 7 cents per share, from a profit of $1.48 billion, or 52 cents per share, in the same quarter the year before.

But excluding items such as the charge, its earnings per share would have been 58 cents compared with analyst expectations for 56 cents, according to Thomson Reuters I/B/E/S.

It said the buyout offers would lead to about voluntary departures of 11,000 employees.

Verizon’s revenue fell 0.3 percent to $26.77 billion from $26.86 billion a year earlier.

The company said the revenue reduction was driven by a $268 million downward adjustment to properly defer previously recognized wireless data revenue that would be earned and recognized in future periods.

Including prepaid customers who pay for calls in advance but do not commit to a contract, Verizon Wireless had 1.4 million net wireless customer additions.

In comparison its biggest rival AT&T Inc (T.N) reported 1.6 million net customer additions for the quarter on July 22.

Verizon’s shares were up $1 to $28 in premarket trading.

(Reporting by Sinead Carew; editing by Derek Caney)

Research and Markets: 2Q10 Egypt Mobile Operator Forecast, 2009 – 2014: Egypt’s Wireless Market Will Have 100 Million Subscribers in 2014

DUBLIN–(Business Wire)–
Research and Markets
(http://www.researchandmarkets.com/research/cff800/2q10_egypt_mobile) has
announced the addition of IE Market Research Corp.’s new report “2Q10 Egypt
Mobile Operator Forecast, 2009 – 2014: Egypt’s Wireless Market will have 100
Million Subscribers in 2014 with Market Share of Mobinil Declining to 43%” to
their offering.

Mobile Operator Forecast on Egypt provides over 50 operational and financial
metrics for Egypt’s wireless market and is one of the best forecasts in the
industry. We provide five-year forecasts at the operator level going out to
2014. We also provide quarterly historical and forecast data starting in 1Q2003
and ending in 4Q2011. Operators covered for Egypt include: The Egyptian Company
for Mobile Services (Mobinil), Vodafone Group Plc, and Etisalat (Emirates
Telecommunications Corporation). Our Mobile Operator Forecasts are updated
quarterly and are available for one-time delivery or through regular updates.

Global Mobile Operator Forecast covers 50 operational metrics of 200+ mobile
operators in 50+ countries, making up 80% of the worlds population. Our
forecasts are based on our proprietary, country-specific forecasting models.
These models deploy multiple regression analysis and cross-impact matrices that
estimate relationships between subscriber data, technology use and deployment
data, overall economic and demographic changes expected in a particular country;
and relate these to company operational and financial metrics.

Executive Summary:

Strong subscriber growth in Egypt’s wireless market continues

* +34.1% industry average subscriber growth in 4Q.2009
* The operator-wide average subscriber growth (YoY) was 34.1% in 4Q.2009, down
from 37.4% in 4Q.2008.
* Etisalat is the leader in subscriber growth in Egypt with a 87.4% growth rate
(YoY) in 4Q.2009.
* Subscriber growth rates at Mobinil (ECMS) and Vodafone were also strong in the
latest quarter at 26.0% and 32.4% respectively in 4Q.2009.

ARPU’s continue declining in Egypt’s mobile operator space

* -19.7% industry average ARPU growth in 4Q.2009
* Negative ARPU growth continues in Egypt’s mobile operator space. The industry
average ARPU growth rate was -19.7% in 4Q.2009, down from -12.7% in 4Q.2008.
* Mobinil (ECMS)’s ARPU growth rate (YoY) in 4Q.2009 was -15.9%, down from -8.0%
in 4Q.2008.
* Vodafone’s ARPU growth fell to -23.3% in 4Q.2009, down from -16.5% in
4Q.2008.

Minutes of Use per Subscriber are stabilizing The industry average MOU/Sub
growth of -1.4% in 4Q.2009

* The operator-wide average Minute of Use (MOU) per subscriber reached 143
minutes per month in 4Q.2009 (down -1.4% from 145 minutes in 4Q.2008).
* Mobinil (ECMS)’s MOU/Sub was 137 minutes and Vodafone’s MOU/Sub was 150
minutes in 4Q.2009.

Positive EBITDA growth at Vodafone in the latest quarter

* +0.4% industry-average EBITDA growth in 4Q.2009
* The industry average EBITDA growth rate (YoY) was 0.4% in 4Q.2009, down from
24.5% in 4Q.2008.
* Vodafone’s EBITDA growth rate (YoY) was 2.5% while Mobinil (ECMS)’s EBITDA
growth (YoY) was still negative at -1.6% in the latest quarter.

So what is IEMR’s Forecast?

Total wireless subscribers in Egypt to reach 100 million in 2014

* All of the major operators are offering SIM cards to mobile subscribers in
Egypt, and this causes a significant increase in subscriber numbers. We now
forecast that total wireless subscribers in Egypt will increase from about 55
million in 2009 to 100 million in 2014.
* Mobinil (ECMS) will continue to be the largest mobile operator in Egypt. Our
model predicts that ECMS (Mobinil)’s number of subscribers will increase from
25.3 million in 2009 to approximately 43.2 million in 2014.
* We also expect that, by the end of 2014, Vodafone will have 38.8 million
subscribers and Etisalat will have 18.2 million subscribers.

Vodafone and Mobinil (ECMS) will be losing market shares to Etisalat over the
next five years

* Our model predicts that Etisalat’s subscriber market share will increase from
12.1% in 2009 to 18.2% in 2014.
* On the other hand, the largest two operators will be losing subscriber market
shares over the next several years. We expect that Mobinil’s share will decrease
to approximately 43% by the end of 2014.

ARPUs in Egypt will be declining from 2010 to 2014

* Our forecasting model predicts that the industry average monthly ARPU will
decline from EGP 42 to EGP 36 over the forecast period, 2010 – 2014.
* We expect that Mobinil’s monthly ARPU will be approximately EGP 33 and
Vodafone’s monthly ARPU will be EGP 40 in 2014.

Mobinil (ECMS) will continue to enjoy higher profitability than Vodafone over
the next five years

* We expect that Mobinil’s EBITDA margin will continue to be higher than
Vodafone’s EBITDA margin over the forecast period.
* Our model forecasts that EBITDA margins (calculated as EBITDA/service revenue)
at Mobinil and Vodafone will be approximately 47.5% and 40% respectively in
2014.

Companies Mentioned:

* Mobinil (ECMS – The Egyptian Company for Mobile Services)
* Vodafone Group Plc
* Etisalat (Emirates Telecommunications Corporation)

For more information visit

http://www.researchandmarkets.com/research/cff800/2q10_egypt_mobile

Research and Markets
Laura Wood, Senior Manager,
press@researchandmarkets.com
U.S. Fax: 646-607-1907
Fax (outside U.S.): +353-1-481-1716

Copyright Business Wire 2010