Telecom Egypt profit falls on economic chaos
Cairo, March 11, 2013
Telecom Egypt reported a 12.8 percent fall in full-year net profit, hit by economic turmoil in the north African country and a further decline in its fixed-line business as customers switch to mobile phones.
The company, which is hoping growth in data services will offset lower fixed-line income, said on Monday it made a net profit of 2.61 billion Egyptian pounds ($386 million) last year, compared with 2.99 billion in 2011.
Egypt's economy has been battered by political turmoil since Hosni Mubarak was ousted from office in February 2011, with violence and rows between political groups hurting the economy.
Telecom Egypt Chief Executive Mohamed Elnawawy said he was optimistic about the long-term business and political conditions in the country.
"All that I can say is that we are very optimistic as the fundamentals are the same," Elnawawy, who is also chairman, told a conference call.
However Samir Azmi, head of the technical analysis desk at Blom Egypt Securities, remained cautious.
"Nothing keeps going down for ever, but I can't see any other practical reasons behind such optimism as long the status of the country remains unchanged," he said.
Egypt's current economic indicators give little room for cheer. Inflation jumped 8.2 percent in the year to February up from 6.3 percent the previous month and its dollar reserves have reached critically low levels.
Its currency has lost around 8 percent since the end of last year while the government is seeking to reopen stalled negotiations for a $4.8 billion loan from the International Monetary Fund.
Egypt Telecom said fourth-quarter net profit was 452 million pounds. It did not give a comparative figure, but a financial statement on its website showed 443 million pounds net profit in the fourth-quarter of 2011.
For the full year, it reported a 37.1 percent margin on its earnings before interest, taxes, depreciation and amortisation (EBITDA), compared with 46.7 percent in 2011. Annual revenue rose 1.6 percent to 10.03 billion pounds.
Egypt Telecom shares were up 1 percent at 13.70 pounds by 1100 GMT.
Egypt said in December it would grant Telecom Egypt a license by mid-2013 to provide mobile services, Elnawawy said he expects to get the license by June. – Reuters