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Post-revolution downturn takes toll on Telecom Egypt
Net income falls further than analysts had forecast; Voice, Internet revenue slip from earlier quarter;Company says some services disrupted by cable theft
August 15, 2011 3:41 by Reuters
Land-line monopoly Telecom Egypt posted a 15 percent drop in second-quarter net profit, blaming a depressed economic climate after President Hosni Mubarak was ousted in February.
Telecom Egypt reported net income of 826 million Egyptian pounds ($138.8 million), down from 971 million in the same period a year earlier and below the 853 million average forecast in a Reuters poll of four analysts.
Revenue dropped 3.7 percent to 2.61 billion pounds but was up 8.5 percent on the first quarter. Earnings before interest, tax, depreciation and amortisation (EBITDA) were 1.25 billion pounds, down from 1.4 billion in the same period last year.
Analysts had forecast, on average, revenue of 2.66 billion pounds and EBITDA of 1.32 billion.
“The disruption caused by the revolution in Egypt during the first quarter, while easing, continues to have some impact on TE’s retail business,” the company said in a statement.
Telecom Egypt said voice revenue fell 8.2 percent from the first quarter because more customers failed to pay bills and had their lines disconnected. Other customers suffered service disruption due to the theft of copper cables.
Internet and data revenue fell 14 percent from the first quarter.
The firm, which relies on data services to offset lower fixed-line income, is trying to establish a mobile operation to boost longer-term growth prospects, and aims to secure a mobile virtual network licence by the end of the year.
It owns a 45 percent stake in Vodafone’s Egyptian mobile venture but does not have management control and only consolidates part of the profit from that business.
Last year, it offered to buy out Vodafone’s 55 percent stake in Vodafone Egypt but could not agree a price.