OTMT 3Q16 losses narrow faster than expected, but still loss-making at operating level   Revenue: EGP123mn, +77% Y-o-Y, +20% Q-o-Q, +20% vs. EFGe EBITDA margin: -0.2%, +8.3pp Y-o-Y, +38.1pp Q-o-Q, +16.8pp vs. EFGe Net loss: EGP54mn, -99% Y-o-Y, +22% Q-o-Q, +14% vs. EFGe   OTMT’s 3Q16 net loss came in at EGP54mn, slightly better than our expected loss of EGP63mn. The beat was largely due to stronger-than-expected EBITDA margins in the marine cables segment, but the company did not provide any colour on what drove the highest EBITDA in this segment since the company’s was demerged from Orascom Telecom Holding. Revenue was also better-than-expected (+20% vs. EFGe), on the back of higher-than-expected revenue from financial services (+105% vs. EFGe).   Despite the better-than-expected results, we are still concerned that OTMT remains loss-making at the operating level as it has been since the deconsolidation of is North Korean operation. We remain Sellers of the stock, as we believe the current market price is assigning an unwarranted premium to the company’s assets. OTMT remains unable to carry out money transfers from North Korea for importing equipment and is incapable of repatriating profits as yet. (Earnings release, Omar Maher)   OTMT: EGP0.85 as of 16 November 2016, Rating: Sell, FV: EGP0.53 per share, MCap: USD290mn, OTMT EY / OTMT.CA