TE sees bottom line boost from corporate income tax change, as revenues in FY15 remain flat

8 Mar 2016

Egyptian fixed line incumbent Telecom Egypt (TE) has published its audited consolidated financial results for the year ended 31 December 2015, revealing that despite flat revenues it had recorded a notable increase in net profit, though this was mainly thanks to tax changes.

In the twelve-month period under review TE generated total sales revenues of EGP12.184 billion (USD1.58 billion), representing a year-on-year increase of just 0.2% from the EGP12.158 billion reported for FY 2014. Notably, turnover from the company’s residential customer-focused services was actually up 14% compared to the previous year at EGP3.568 billion, with revenue attributed to ‘Enterprise Solutions’ and ‘Domestic Wholesale’ rising by 1.4% (to EGP1.905 billion) and 8.3% (EGP2.927 billion), respectively. By comparison, the telco’s turnover from its ‘International Carrier Affairs’ division fell by 2.9% y-o-y, while revenues from its ‘International Customers and Networks’ division slumped by 41.5%.

EBITDA in FY 2015 was EGP3.442 billion, delivering a margin of 28.2%, which the company said remained ‘in line with management’s expectations’; the figure, however, represented a 10.4% decline in EBITDA from EGP3.841 billion in 2014. Consolidated net profit after tax for FY15 meanwhile was EGP2.997 billion, which TE noted represented a ‘significant increase of 111.6%’ compared to the previous fiscal year. It said, however, that this increase was due to the amendments to the corporate income tax law, mainly lowering the corporate income tax rate from 30% to 22.5% retroactively as of 1 January 2015 and changing the basis of taxation on dividends. Such changes, it said, had resulted in ‘recognising a lower corporate income tax for the period and reversing deferred tax liability’, while it added that the increase of income from investment by 35% y-o-y contributed positively to the company’s bottom line.

In operational terms, at the end of 2015 TE’s residential broadband subscriber base totalled 2.644 million, having surged by more than 41% year-on-year from 1.868 million at end-2014. Business broadband subscribers were similarly increased, rising by more 51% to 169,000 at the end of the latest reporting period. Fixed voice subscribers too increased during 2015, with those attributed to the ‘Home Services’ division rising to 5.48 million (Dec-14: 5.28 million) and those in the ‘Enterprise Solutions’ division increasing to 1.07 million (Dec-14: 1.05 million).

Commenting on the company’s performance, Osama Yassin, TE’s chief executive officer, was cited as saying: ‘Today’s results reflect a good year for our business, a year that was characterised by ongoing operational improvements and a solid financial performance. This has been achieved against the background of a number of external challenges in the wider region and is testament to our customer-centric approach at both the consumer and business level.’

Egypt, Telecom Egypt