Revenue – USD707mn, -2% Y-o-Y, 0% Q-o-Q, +1% vs. EFGe EBITDA margin – 48.0%, +3.3pp Y-o-Y, +6.5pp Q-o-Q, +2.5pp vs. EFGe Net income – USD48mn, vs. 1Q15 net loss USD70mn, vs. 4Q15 net loss USD12mn, +638% vs. EFGe   GTH posted a strong set of 1Q16 results, with net profit at an encouraging USD48mn versus our estimate of USD7mn. While we did expect GTH to turn profitable this quarter, we did not expect this level of profitability, which was largely driven by stronger-than-expected margins across all three subsidiaries. Djezzy (Algeria) posted its strongest EBITDA margin in two years at 57.4%, and both Mobilink (Pakistan) and Banglalink (Bangladesh) posted record-high EBITDA margins at 45.2% and 45.9%, respectively. This led to a group EBITDA margin of 48.0%, the highest since 3Q13, vs. our estimate of 45.5%. We attribute the strong margin levels to the company’s ongoing transformation programme that is meant to improve cost efficiency and expand revenue sources. The company incurred one-off charges of USD7mn in SIM verification cost (Pakistan) and restructuring cost (Bangladesh); excluding these charges, group EBITDA margin would have been 48.9% in 1Q16. Moreover, earnings were boosted by a FX gain of USD7mn, we did not expect, while depreciation and amortisation came in lower than expected, and the company booked USD8mn in technical services fees that we did not expect.   We see this is as an impressive set of numbers, especially that the beat came at the operating level, and we reiterate our Buy rating on GTH as one of our tactical picks for the 1Q16 results season. The strong 1Q16 results constitute a good short-term catalyst for the stock, in our view. In the longer run, we continue to see value in GTH, but the stock performance is more likely to be driven by news flow regarding the proposed merger in Pakistan, as well as receiving dividends from Algeria. Another catalyst we see, to a lesser extent, is that the company remains an acquisition target by one of its majority shareholders, direct or indirect (VimpelCom or LetterOne).   We note that GTH has already issued USD1.2bn in bonds, the proceeds of which were used to fully repay parent VimpelCom’s shareholder loan. The positive impact of lower effective interest rates from this refinancing was not felt in 1Q16 numbers, as the issuance was closed in end-April; hence, the impact should be seen starting 2Q16, in our view. On a separate note, GTH said its Algerian unit had submitted the tender for 4G/LTE frequencies in April 2016, and the licence award is expected in 2Q16, while service launch is expected in 3Q16. (Earnings release, Omar Maher, Karim Riad)   Global Telecom Holding: USD1.60 per GDR / EGP2.76 per share as of 12 May 2016, Rating: Buy, FV: USD2.72 per GDR / EGP4.25 per share, MCap: USD1,679 million, GLTD LI / GLTDQ.L