Mobinil subscribers grow as Q3 profit falls
Cairo, October 26, 2010
Egyptian cell phone operator Mobinil said subscribers grew in the third quarter while lower usage and higher advertising costs during the Muslim fasting month of Ramadan drove it to a lower net profit.
The firm said on Monday it had added 2.3 million mobile subscribers in the quarter to bring its total to 28.4 million.
Mobinil signed on fewer than 1 million subscribers in the first half, blaming the result on delays in the rollout of a new dial system, allowing its main rival, a local unit of Vodafone , to close in on its leading position.
"It's obvious that the management is taking the strategy of sacrificing the margins for the sake of maintaining their leadership position in the market. But this is not translated into profit," Ahmed Adel, an analyst at Naeem Holding, said.
The quarter saw "a slowdown in the rate by which revenues are declining despite the seasonal effect of Ramadan," Chief Executive Officer Hassan Kabbani said in a statement.
Revenue grew more than 7 per cent year-on-year to EGP2.74 billion, above the mean forecast of EGP2.65 billion. Revenue was EGP2.79 billion in the third quarter of 2009.
However, net profit, including its newly-acquired internet business, fell to EGP280 million ($48.5 million) in the quarter from a restated figure of EGP491 million the previous year and well below a mean forecast of EGP393 million from a Reuters poll of seven bankers and brokers.
Mobinil had earnings before interest, taxation, depreciation and amortisation (EBITDA) of EGP1.1 billion in the third quarter, roughly in line with the mean estimate in the Reuters poll.
The quarterly results were released after the close of trade. The Cairo-listed shares closed up 0.1 percent at EGP183 per share, valuing the firm at $3.1 billion.
Mobinil is jointly-owned by Cairo-based Orascom Telecom and France Telecom. The two reached an agreement in April to end an acrimonious legal battle over ownership of the firm.
Orascom's chairman, Egyptian billionaire Naguib Sawiris, is trying to sell control of Orascom to Russian operator Vimpelcom. The firm's stake in Mobinil will not be included in the $6.6 billion deal, if it is completed.
Profit was EGP289 before incorporating non-mobile operations. Mobinil purchased internet firm LinkDotNet from Orascom in September. – Reuters