Broadband access growth boosts TE revenues in 2016; net profit down on events in Q4

13 Mar 2017

Telecom Egypt (TE) has published its results for the year ended 31 December 2016, revealing an impressive 16% year-on-year increase in turnover, as the company recorded sizeable gains in the number of customers signed up to its broadband services.

In the period under review TE generated revenues of EGP14.133 billion (USD804 million), up from EGP12.184 billion in 2015, with its ‘Home Services Business Unit’ accounting for the largest portion of this total – EGP4.240 billion, up from EGP3.568 billion. All of the company’s other units posted revenue growth during 2016, with the more notable of those being its ‘Enterprise Solutions’ division, which increased turnover by 25.7% y-o-y to EGP2.395 billion, and its ‘International Customers and Networks’ unit, where turnover rose by almost 40% y-o-y to EGP1.126 billion.

EBITDA for 2016 meanwhile totalled EGP3.733 billion, representing an 8.4% increase against FY 2015, though EBIT actually declined by 13.4% annually to EGP2.277 billion. EBIT margin for the latest full year period was 16.1%, down from 21.6% in the previous fiscal year. Net profit was also down in 2016, falling by 10.9% to EGP2.670 billion; this decline was attributed to events in the final quarter of the year which related to ‘higher employee related costs (Pension Fund contribution), decline in income from [the company’s] Vodafone Egypt stake due to currency devaluation and exceptional provisions made to meet potential tax liabilities’.

During 2016 TE saw a continued decline in the number of fixed line voice accesses on its books, with residential connections falling to 5.34 million (Dec-15: 5.48 million), though business fixed voice lines increased to 1.12 million (Dec-15: 1.07 million). However, the company fared far better in the broadband arena, with the number of residential broadband accesses increasing by more than 20% y-o-y to 3.182 million, while fixed broadband lines rose to 199,000 (Dec-15: 165,000).

Commenting on the company’s performance, TE’s chief executive Tamer Gadalla said: ‘Revenue performance has once again been driven by significant demand for data services, both in retail services and through our domestic wholesale business. The strategic investment to modernise our network backbone that began in 2014 is paying off and playing a critical role in the revenues we generate today … We enjoyed a dynamic top line growth in 2016, but we saw a slight decrease in profitability as management decided to consider prudent accounting treatments that impacted the cost elements, especially in the last quarter of 2016.’

Egypt, Telecom Egypt