Broadband subscriber additions drive revenue increases in 9M14 for Telecom Egypt

13 Nov 2014

Telecom Egypt generated consolidated revenues of EGP2.716 billion (USD378 million) in the quarter ended 30 September 2014, down from EGP2.866 billion in the year earlier period. Despite the decline, however, turnover in the first nine months of 2014 stood at EGP9.149 billion, representing growth of just over 9% year-on-year. Moreover, in the third quarter of 2014 TE actually saw revenue growth at all of its units bar one, that being its ‘International Customers & Networks Business Unit’ (‘IC&N’). While that division saw turnover slump to just EGP88 million, from EGP449 million in 3Q13, the telco’s managing director Mohamed Amin El-Nawawy noted: ‘While the nature of this business is that there is no specific quarterly trend that can be followed, and the completion of specific projects in individual quarters, such as the AAE1 and SMW5 submarine cable projects in Q2 2014, will always create an uneven distribution of recognised revenues throughout the course of any given year.’

Meanwhile, earnings before interest, tax, depreciation and amortisation (EBTIDA) in the third quarter totalled EGP646 million, a decline of 43% against the corresponding period a year earlier, with TE saying that this was directly attributable to lower revenues and higher costs. Net profit after tax in 3Q14 also slumped, declining by 61.4% y-o-y to EGP251 million.

In operational terms, at the end of September 2014 TE had a total of 1.814 million broadband accesses on its books, up from 1.448 million a year earlier, though fixed voice lines in service continued to decline, standing at 5.56 million at the end of the quarter under review, down 3.1% y-o-y.

Commenting on the operator’s financial performance, Mr El-Nawawy added: ‘In the third quarter 2014, we experienced continued revenue growth across most of our business units, in particular our core retail business units … Importantly, the growth trend in our broadband offering was exceptional. Broadband services made a significant contribution to TE’s retail revenues for the period and reached a record level of subscribers. This reinforces our ongoing efforts to become a total telecom operator and redresses the balance between our wholesale and retail revenues.’

In separate but related news, Reuters reports that TE may not sell its 45% in local mobile network operator Vodafone Egypt once it receives a concession allowing it to offer mobile services under its own steam. While the government has said that as part of the unified license regime it would require TE to divest its holdings, Mr El-Nawawy was cited as saying that his company had ‘not been notified of any exit date’ and could look at alternative options such as a taking a controlling stake in Vodafone Egypt, subject to government approval. The executive also confirmed that TE was hiring consultants to advise it on what to do with its minority holdings, including those in Vodafone Egypt.

Egypt, Telecom Egypt, Vodafone Egypt