Telecom Egypt’s first quarter net profit slumps on lower revenues and increased costs

14 May 2014

Telecom Egypt (TE) has published its financial results for the quarter ended 31 March 2014, revealing a 36.0% year-on-year decline in net profit on the back of reduced revenues, increased costs and lower investment income. Consolidated turnover for the three-month period totalled EGP2.564 billion (USD367 million), representing a 5.6% decline from the EGP2.717 billion reported in the corresponding quarter of 2013. Revenues from ‘Home’ services increased by 5.8% y-o-y to EGP764 million, with increased turnover from data services (up 31.2%) offsetting a 13.4% decline in revenues from fixed voice services. Meanwhile, although TE’s International Carriers Affairs business unit reported a 17.6% y-o-y drop in revenues to EGP731 million in 1Q14, it noted it had registered quarter-on-quarter growth of 1.1%, which it said it considered to be ‘a good indicator in the midst of challenges facing the international wholesale business globally’.

Earnings before interest, tax, depreciation and amortisation (EBITDA) in 1Q14 stood at EGP805 million, up 5.1% against the EGP766 million reported in 4Q13, but down by 15.0% year-on-year, with TE saying the decline was ‘directly attributable to lower revenues and higher costs’. Net profit for the period under review totalled EGP549 million, down from EGP858 million in the first three months of 2013. Meanwhile, capital expenditures in 1Q 2014 amounted to EGP226 million compared to EGP151 million a year earlier, although TE said that this was lower than anticipated because of ‘the timing of contracts’, a number of which were said to have been signed towards the end of the period, with these to come into effect in 2Q14.

As at end-March 2014 TE’s ADSL broadband subscriber base totalled 1.645 million, representing a 25% increase from 1.314 million a year earlier. Fixed voice subscriber numbers actually increased against the end of 2013, from 5.72 million to 5.73 million three months later, though the figure was down from 6.11 million at end-March 2013.

Egypt, Telecom Egypt