Telecom Egypt (TE) expects three to four percent growth in revenues in 2013, at least doubling that in the first quarter as it struggles to deal with the decline of its fixed-line business and an economy in crisis.
The state monopoly has been battling to raise its share of a developing mobile phone market in the Arab world’s most populous country, but is still waiting to launch a new operator that would rival its existing joint venture with Vodafone and the sector’s two other players.
Regulators said in December they would grant the licence in mid-2013 while pushing forward with plans to allow other mobile companies the right to use Telecom Egypt’s fixed-line network – on which it has based its internet business.
In an email to Reuters after first quarter results, Mohamed Elnawawy also said he expected capital expenditure for the year to be between 1 and 1.2 billion Egyptian pounds and earnings before interest, taxes, depreciation and amortization (EBITDA) in 2013 to remain stable compared with 2012.
Net profit in the first quarter beat analysts’ forecasts at 858 million Egyptian pounds ($123.20 million), just 6 percent lower than a year ago.
EBITDA, a key measure of profitability for telecoms companies, was down 32 percent at 947 million pounds, but the company said its EBITDA margin was 34.8 percent in the first quarter and would remain in the “mid-30s” – a relatively healthy figure compared to other telecoms worldwide.
Elnawawy said he is working to develop “a number of competitive services for the launch of mobile operations… but it is still too early to go into further details as the dynamics of the market continue to change.”
Revenues in the first quarter rose 1.4 percent to 2.72 billion Egyptian pounds.
The average forecast for the company, whose data services are helping offset lower fixed-line income, was for net profit of 595.34 million pounds from six analysts polled by Reuters and revenue of 2.59 billion pounds based on five analysts.
EATEN AWAY
Egypt has three mobile operators: Vodafone Egypt, Mobinil , which is controlled by France Telecom, and Dubai-based Etisalat.
The growth of those businesses is steadily eating away at Telecom Egypt’s traditional fixed-line services as Egyptians opt to run mobile phones and internet instead, forcing the company to seek ways of expanding its exposure to mobile.
The company has to share its profits from a 45 percent stake in Vodafone Egypt with its international partner and has been blocked for some time, largely by Egypt’s unstable political scene, from pushing ahead with the plan for its own provider.
Elnawawy said he does not expect the mobile companies to offer fixed-lined services yet would welcome that if happened. The company’s business in fixed-line internet is the one area where it is prospering.
“We do see growth in our retail segment of our business via Telecom Egypt Data, for which revenues alone grew 28.9 percent in the first quarter of 2013, compared with the same period one year ago,” he said.
“Increasing use of smart phones and the growth in internet penetration have played an important role and Telecom Egypt is well placed to meet the demands of an increasingly connected and mobile population,” Elnawawy said.
Reuters
