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Mobinil shifts focus to data services

Cairo, August 9, 2011

Egyptian mobile firm Mobinil  is switching focus from market share to boosting revenue per user and hopes to expand data services to make up half its revenue by 2013, its chief executive said.

Analysts estimate data services constitute between 4 and 10 per cent of Mobinil's revenue. CEO Hassan Kabbani said in an interview late on Sunday that the segment's share of revenues had reached "double digits", but would not be more specific.

Mobinil, jointly owned by Orascom Telecom and France Telecom , plans to expand services such as mobile payment and Internet through LinkDotNet, an Internet provider it bought last year, to bolster profitability in a saturated and fiercely competitive market.

Egypt's mobile subscription rates in 2010 topped 80 per cent, and price wars between its three operators -- Mobinil and the local units of Etisalat and Vodafone -- have eaten into revenue.

"We have reached a level with the price that is very difficult now to go below," Kabbani said. "The competition is no longer about how many subscriber identity modules (SIMs) or how many customers you can claim to have. It should be more oriented towards average revenue per user (ARPU)."

"Data can play the role to compensate for what we are seeing ... I can expect that maybe in three years from now data revenue can constitute more than 50 per cent of the total revenue."

Mobinil, whose first-half income was hit by the unrest that toppled president Hosni Mubarak, has suffered a boycott of its services by subscribers who took offence at a cartoon posted online by its founder in June.

Some considered the cartoon posted by Naguib Sawiris, which showed Mickey Mouse with a long beard and Minnie Mouse veiled in black, as offensive to Islam. Mobinil had 30.541 million subscribers at the end of June.

Kabbani said subscribers who had left the network due to the boycott were currently in the "hundreds of thousands".

"To reduce the impact on the third quarter, (Mobinil) is doing everything commercially to compensate," Kabbani said, citing a focus on promotion offers and expansion of services.

Hit to earnings

Analysts expect the boycott to hit the firm's third-quarter earnings. Mobinil posted a second-quarter net loss of 108.5 million pounds ($18 million).

First-quarter net income tumbled 94 per cent year on year following a forced shutdown of communication services for several days during the uprising.

The stock has shed 37 per cent of its value since the start of 2011, with the latest market slide this week taking the shares to their lowest in seven years. The main Egyptian index  has fallen 33 per cent this year.

Kabbani said he was positive the firm would bounce back, especially as it improves its data offerings.

He said Mobinil was pressing for changes to some policies related to leasing network infrastructure and international gateway services, such as LinkDotNet's reliance on the infrastructure of state-owned landline monopoly Telecom Egypt  , which also owns the country's biggest Internet service provider, TE Data.

"I am dependent on the network of my competitor because Telecom Egypt owns TE Data. It's a strange situation," he said.

"I asked the regulator and the ministry not to put Telecom Egypt in such a position. They cannot be the wholesaler and supplier for the other operators and compete with them at the same time," he said.

Mobinil is pushing to buy its own international telecom gateway or gain authorisation to use an alternative to Telecom Egypt's. Kabbani said fees that would be levied on Mobinil for an international gateway licence did not make economic sense.

"We are asking the government and the ministry of telecommunications to reconsider this and to put to us another fee ... or (create) new formulas like revenue sharing," he said. – Reuters




Tags: Orascom | Cairo | mobinil | Revenue | Data services |

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