Telecom Egypt reports 45% y-o-y increase in net profit in 2Q13

15 Aug 2013

Fixed line incumbent Telecom Egypt (TE) has published its financial results for the three months ended 30 June 2013, with the operator revealing that consolidated net profit for the period increased by more than 45% year-on-year to EGP896 million (USD128 million). The telco cited the primary reasons for the uptick as being the reversal of impairment ‘following the reassessment of provisions countered towards the disputes with domestic mobile operators, reflecting management’s acute confidence’. Further, the telco also registered a foreign exchange gain of EGP137 million.

Consolidated revenues in the second quarter of 2013 totalled EGP2.773 billion, up 16.1% against the corresponding period of 2012, with turnover from retail services accounting for EGP1.194 billion of the total, having increased 4.1% y-o-y, reflecting ‘growth from TE Data and project revenues related to new residential developments’. TE’s wholesale business meanwhile saw sales of EGP1.579 million, representing a more than 27% increase against the second quarter of 2012, with international wholesale turnover rising by 31.6% to EGP1.222 million due to the telco’s ongoing bilateral agreements with regional telecommunication operators. However, EBITDA in 2Q 2013 declined by 7.1% compared to the same period of 2012, falling to EGP840 million, with this drive by three main cost increases, those being: two 8% annual increases in salaries, the first which came into effect in July 2012 and the second in January 2013, following a salary restructure process announced during the first half of 2012; the back dating of interconnection costs due to an agreement with mobile operator MobiNil; and the renewal of Vodafone Egypt’s (VFE) interconnection agreement.

In operational terms, at the end of June 2013 TE’s broadband subscriber base stood at 1.471 million, up by 22.1% compared with the 1.205 million such accesses it reported a year earlier.

Meanwhile, in separate but related news, Bloomberg cites TE as saying that the award of an integrated license which will allow it to offer mobile services to boost sales growth is ‘imminently around the corner.’ While the concession was initially expected to be issued in mid-July, this was understood to have been delayed due to the political upheaval in the country. TE chief executive officer Mohamed Amin El-Nawawy was cited as saying of the progress being made towards acquiring the licence: ‘We have a near-final draft … Obviously some of the bigger landscape issues that have been happening in Egypt late in June and July might have slowed things down a little bit.’

Egypt, Telecom Egypt