Network upgrade costs push MobiNil to Q1 loss

1 May 2012

An ongoing programme to upgrade its mobile network to offer third-generation services has seen MobiNil, Egypt’s largest cellco by subscribers, slump to a net loss in the first three months of 2012. In releasing its financial results for the three months ended 31 March 2012 the Egyptian operator posted a net loss of EGP74 million (USD12.2 million) for the quarter, compared to a net profit of EGP23 million in the corresponding period of 2011. The company also noted that its bottom line was affected by higher depreciation and amortisation (D&A) in the period resulting from the partial swap of the network from 2G to 3G; in 1Q12 D&A was EGP701 million, up from EGP558 million in the year-ago quarter. Network investment, meanwhile, has been ramped up to meet ‘anticipated usage growth while maintaining the network qualitative edge’, with MobiNil stating that capital expenditure (CAPEX) additions for the first quarter of 2012 had amounted to EGP304 million, up from EGP199 million in 1Q 2011.

Total revenues for the three month period under review stood at EGP2.525 billion, representing a 3.9% year-on-year increase, with turnover from mobile services rising by 2.8% compared to 1Q11, which MobiNil noted represented its best growth in eight quarters. Fixed broadband revenues jumped by 34.8% to reach EGP120 million.

At the end of the first quarter of 2012 MobiNil’s mobile subscriber base stood at 32.264 million, up 7.5% from the 30.358 million customers it had twelve months earlier, but down from the 32.914 million it had at end-December 2011. Pre-paid subscribers continue to account for the bulk of the total – 97.1%. Fixed broadband accesses, meanwhile, reached 418,000 at the end of March 2012, up from 350,000 a year earlier.

Yves Gauthier, MobiNil CEO, said of the results: ‘During the first quarter of 2012, we witnessed the confirmation of our adopted revenue growth strategy, which led to reasonable progress despite the economic and political environment that remains unstable. The results signal that MobiNil’s recovery is underway and that the changes we have implemented to our business to recover from previous unfavourable condition have started to pay off.’

Egypt, Orange Egypt