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Telecom Egypt profit dips, eyes data growth

Cairo, November 11, 2010

Landline monopoly Telecom Egypt's profits dipped more than expected in the third quarter, weighed down by extra promotional spending during Ramadan and an impairment cost.

The mostly state-owned firm's chief executive said he expected broadband subscriber numbers to keep growing by 40-50 percent next year, and the company aims to launch services through its TE North subsea cable by the end of 2010.

The firm's third-quarter profit came in at 766 million Egyptian pounds ($133 million), a little below the average forecast of 796 million pounds given in a Reuters poll of eight analysts. Estimates ranged from 614 million to 954 million.

The firm made a profit of 826 million pounds in the third quarter of 2009, and posted a forecast-beating 971 million pound profit in the second quarter of 2010.   

Telecom Egypt is banking on data services to help offset lower fixed-line income, which has been hit by competition from the mobile market. Voice revenues fell 23 percent in the first nine months of 2010, while internet and data revenues rose 22 percent.   

"There is clearly an underlying deterioration in voice, and that's just an industry-wide phenomenon because people are using mobiles more," said Nomura telecoms analyst Martin Mabbutt.   

The coincidence of Ramadan with the summer holidays may have also dampened demand for fixed-line calls in the July-September quarter and pushed the firm to spend more on advertising and promotions, analysts said.   

Chief executive Tarek Tantawy said the firm was considering a mobile virtual network operator (MVNO) licence, which would let it provide cellphone services without its own network, but is waiting for the regulator to set terms before deciding.

In a phone interview Tantawy said he expected to have firmer plans in the first quarter of 2011.   

The firm's TE North cable between Egypt and France is now finished and the company is aiming to start services by the end of the year, Tantawy said.

Telecom Egypt has said it expects the submarine link to bring in $500 million in revenue over the next 15 years. It should also boost margins by cutting bandwidth costs and allowing the firm to provide a faster internet service. -Reuters




Tags: data | Telecom Egypt | landline |

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