Orascom Telecom swings to quarterly profit

Orascom Telecom swings to quarterly profit

Orascom controlled by Russia's Vimpelcom since 2011; Results last year weighed down by tax charges; Says underlying profit grows in Q2; Cites cost cuts, subscriber growth, more data use

August 15, 2012 12:32 by Reuters

Egypt-based Orascom Telecom reported second-quarter net profit of $27 million on Tuesday, reversing a loss of $58 million a year earlier when results were weighed down by tax charges from the sale of its Tunisian business.

Egypt-based Orascom has been controlled by Russia’s Vimpelcom since a tie-up in April 2011 and has operations in Algeria, Pakistan, Bangladesh and Canada.

Earnings before interest, tax, depreciation and amortisation (EBITDA) were $469.8 million, the company said, also revising down its year-earlier figure to $439 million from $476 million.

It said comparative year-earlier figures were restated to reflect the demerger of its units Mobinil, koryolink and Alfa as part of the Vimpelcom tie-up.

Orascom said its EBITDA margin, a broad measure of profitability, was 50.5 percent, up 3.1 percentage points from a year earlier on a like-for-like basis.

In Bangladesh it fell by 4.7 percentage points due to higher marketing costs as it took on more customers, Orascom said.

It attributed the group’s higher profitability to cost cutting, subscriber growth and more use of data services but said adverse currency effects weighed on the bottom line as reported in U.S. dollars.

In Algeria, its most lucrative market which has been hit by a long-running dispute with the government, average revenue per user declined as the subscriber base expanded, but new subscribers used their phones less than others.