KUWAIT CITY, June 18, (RTRS): SICO Investment Bank started coverage of Kuwaiti telecom operator Wataniya with a “buy” rating and a price target of 3.06 dinars, saying the company’s operations in Algeria and Tunisia will drive overall growth.
SICO expects the two units to contribute 76 percent of the Kuwaiti company’s incremental revenue growth during 2012-2014.
“Algeria will likely have a 3G license auction, and a successful bid will enable the company to capitalize on the country’s untapped data potential,” the brokerage said in a note to clients.
Nedjma, Wataniya’s Algerian unit, has been providing attractive offers that has led to higher usage and ARPU (average revenues per user), benefiting its revenue and margins. The brokerage expects the trend to continue.

Nedjma is also expected to benefit from its significant investments in network infrastructure, helping the company acquire and retain corporate and high value customers.
Wataniya’s Tunisian arm, Tunisiana, recently won 3G and fixed line licenses and is aiming to launch 3G services this July, SICO said.
Wataniya, with its high earnings growth and free cash flow yield, is expected to more than double its dividend over the next three years, the brokerage said.