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Monday, 26 April 2021

Smoke ‘em if you’ve got ‘em

New rules for the license to establish Egypt’s second major tobacco company are now officially being drawn up by the government, a month after several tobacco players filed a formal complaint asking the state to rewrite the conditions booklet, the local press reports, citing anonymous government sources. Advisors are working with the cabinet to draft a new document after the issue was brought to the prime minister, the sources said. The new booklet will address concerns raised by tobacco companies that the license would have given way to a new monopolist in the e-cigarettes and heated tobacco segments.

Why do investors care so much about a cigarette company? It’s simple: Eastern Company, the current monopoly, is one of the richest dividend plays in our neck of the woods.

Background: The Industrial Development Authority (IDA) issued last month a tender for a license that would have curtailed Eastern Company’s monopoly over the country’s tobacco industry. Several major players were invited to compete, but some — British American Tobacco Egypt and Al Mansour International Distribution Company — objected to the conditions and pleaded with the Egyptian Competition Authority (ECA) that the rules would effectively create a monopoly on alternative tobacco products.

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