Mobinil to beat subscriber forecast

Egyptian mobile operator could have 15 million by year-end, but growth likely to slow in 2008, firm says.

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By  Will Rasmussen Published  September 30, 2007

Egyptian mobile operator Mobinil could have up to 15 million customers by the end of the year, beating its previous forecast, its chief executive said on Sunday.

Mobinil's capital expenditure could touch a record 4 billion Egyptian pounds ($716 million) this year, also beating the company's earlier forecast as it expands to meet competition, Alex Shalaby told Reuters.

The company's rate of subscriber growth would likely to slow to between 30% and 50% in 2008 as the market becomes more saturated, Shalaby said.

Mobinil's subscriber base surged 65% in the year to the end of June to 11.9 million customers. The company, which had forecast 14 million users by the end of the year, had up to 13.7 million customers by the end of September, Shalaby said.

"We are well on our way to 14 million and we should have between 14 million and 15 million by the end of the year," Shalaby said.

Capital expenditure would likely peak in 2008 as the company installs a third generation wireless network, before declining in 2009, Shalaby said. The company had forecast capital expenditure of 3.5 billion pounds in 2007.

"We will spend a minimum of 3.5 billion pounds, but not more than 4 billion pounds," Shalaby said. "I would expect comparable capital expenditure in 2008 as we expand our network."

Mobinil would also look to bid for Egypt's second fixed-line licence, which the government has said it would sell in 2008. Etisalat Egypt, which along with Vodafone Egypt competes with Mobinil, said in July it planned to bid.

"It would be interesting to us to be part of that, either directly or through a shareholder," Shalaby said. "We don't want to be the only mobile operator with no access to fixed line."

France Telecom has a 36.3% stake in Mobinil and Egypt-based Orascom Telecom has a 33% stake.

Dividend may drop

Mobinil's increased spending could mean a fall in the company's dividend payout, Shalaby said.

"In the past we had 100% dividend payouts," he said. "We are starting to review this."

A 2007 dividend yield of 7.6%, forecast by Egyptian investment bank Beltone Financial in August, was "a bit high", Shalaby said, without giving further details.

The dividend payout may not change if the company is able borrow the full 3.4 billion Egyptian pound fee it agreed to pay for its 3G licence, Shalaby said.

The company was in talks with banks including National Bank of Egypt and HSBC in Egypt on a loan.

Mobinil was hoping to borrow money for the licence, which it is seeking to pay in instalments over four years, but could also look at selling bonds or raising the company's capital, Shalaby said. He declined to be more specific.

The company could reach an agreement this week on the payment schedule with Egypt's telecom regulator, he said.

Mobinil's average revenue per user (ARPU), which dropped 14% in the second quarter to 62 pounds, would continue to fall, with more Egyptians with lower incomes begin using mobile phones.

"ARPU will reach $10 (55.84 Egyptian pounds) for sure. We are almost there now... We have to be ready for continuing drops," he said.

Overall penetration in Egypt could grow from about 40% at the end of 2007 to more than 50% at the end of 2008, Shalaby said. - Reuters

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