MobiNil sees revenue drop in 4Q/FY2011 as multiple factors dent financial performance

21 Feb 2012

Egyptian mobile network operator MobiNil saw a net loss of EGP177 million (USD29.3 million) in the last three months of 2011, with the cellco’s overall results illustrating what its CEO Yves Gauthier called the ‘extent of challenges the business was facing in a turbulent political, social and economic environment.

Consolidated revenues for the three-month period were EGP2.54 billion, down 8.1% from the EGP2.76 billion the telco reported in the corresponding period of 2010, with MobiNil claiming the decline was mainly the result of lower mobile turnover, which fell 9.1% year-on-year as competition in the sector intensified. Indeed, commenting on the drop in mobile revenues, MobiNil noted a number of factors that it claimed had affected its results, claiming that the erosion of turnover in the sector was mainly due to: the political unrest that affected the country in 2011 and weakened the general macroeconomic environment; the significant contraction of tourism weighing heavily on roaming revenues throughout the year; a boycott campaign which significantly dented revenue in H2 2011; and a fierce price war initiated by competition which contributed to the reduction of average revenue per user (ARPU). Fixed broadband revenues helped offset part of the declines, however, with the operator noting that turnover from such services had increased by 17.8% compared to 4Q10 to reach EGP119 million. For the full-year period, meanwhile, consolidated revenues stood at EGP10.18 billion, a 3.7% drop from FY2010, again reflecting lower mobile turnover (down 6.5% y-o-y to EGP9.77 billion), offset slightly by increased fixed broadband revenues (up 12.2% to EGP431 million).

Quarterly earnings before interest, tax, depreciation and amortisation (EBITDA) were EGP598 million, almost half of the EGP1.10 billion reported in the same period a year earlier, a decline which MobiNil said was the result of lower revenues, higher commercial expenses and the impact of the different accounting treatment of the employees’ bonus.

In operational terms, at the end of 2011 MobiNil’s wireless subscriber base totalled 32.914 million, up 8.9% y-o-y, with the operator noting that net adds in the last quarter had reached 1.34 million. Fixed broadband net additions in the last three months of the year, meanwhile, were 15,900, bringing the broadband customer base to 257,000.

Looking ahead, Mr Gauthier said of his company’s aims for the future: ‘The reshuffled management team understands that 2011 has been quite challenging. However, we firmly believe that, with the improvement of the general environment and the normalization of the competitive landscape, we will be in a position to deliver better results. We are more prepared today to face the challenges that resulted from the uncertain political, social and economic environment. We also remain committed to deploy several initiatives to stimulate growth and improve the operational efficiency of the company, while continuing to adapt our model to cope with a moving environment.’

Egypt, Orange Egypt