Orascom posts big net profit increase, but revenue and EBITDA remain weak

16 Nov 2009

Egypt-based group Orascom Telecom has revealed that revenue for the three months ended 30 September 2009 remained flat compared to the previous quarter, while in the first nine months of the year it registered a 6.3% decline following a sharp decrease in services revenues, mainly as a result of the exclusion of OrasInvest and M-Link. For its third fiscal quarter Orascom posted revenue of USD1.29 billion, down 5.8% year-on-year, but up 0.8% against 2Q 2009, while for 9M 2009 it reported consolidated revenue of USD3.78 billion, down from USD4.02 billion a year earlier. Earnings before interest, tax, depreciation and amortisation (EBITDA) for 9M 2009 meanwhile was USD1.68 million, down 3.5% against the corresponding period in 2008, although again a minor improvement against the previous quarter was seen, with Orascom reporting 3Q 2009 EBITDA of USD577.6 million, up 0.9% against 2Q 09. However, Orascom noted that EBITDA grew in local currency in all key operations; this included EBITDA for its Algerian operations increasing by 3% in local currency compared to a decrease of 10% in US dollars, while its Pakistani arm, Mobilink, saw EBITDA rise by 5% in local currency compared to a decrease of 26% in dollars. Orascom posted far more healthy results in terms of net profit however; for the three months ended 30 September 2009 it posted a 260.6% y-o-y rise to USD180.9 million.

As at end-September 2009 Orascom’s subscriber base had risen to 88.9 million, up 12.1% against the same date a year earlier. The group’s Pakistani arm continued to lead the way, with just over 30 million subscribers at that date, a 3.1% quarter-on-quarter rise; this is still some 4.2% lower than a year earlier however, due to the impact of deactivating unregistered SIM cards and a redefining by the cellco in the way it defined active pre-paid subscribers in mid-2008. Egypt meanwhile reported the strongest subscriber growth in percentage terms for the group, up 30.2% compared to September 2008 at 24.6 million subscribers, and consolidating its position as Orascom’s second largest subsidiary in terms of customer numbers.

Naguib Sawiris, chairman and CEO of Orascom Telecom, said of the results: ‘The performance of Orascom Telecom in the first nine months of 2009 has seen an improving trend over the course of the year as local currencies in most of our key operations have stabilised against the US dollar, after the sharp devaluation of the currencies in Algeria, Pakistan and Tunisia. While the economic environment has improved in recent months the competitive environment remains challenging; in this context Orascom has continued to perform well, although 2009 will be a year of slower growth than 2008, in line with our forecasts.’

Egypt, Global Telecom Holding (GTH, formerly OTH)