Egypt's Mobinil says Q2 net income down 18%

Better than forecast quarterly profit after company expands into lower income market.

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By  Jonathan Wright and Alaa Shahine Published  August 10, 2008

Mobinil, Egypt's biggest mobile phone operator by subscribers, posted an 18-percent fall in second-quarter net income to 425 million Egyptian pounds ($80.2 million) on Sunday.

Average revenue per user (ARPU) declined to 47 pounds a month from 59 pounds a year earlier as the company expanded its customer base into lower-income groups, though it was unchanged from the first quarter.

The number of subscribers rose to 17.5 million in June, a 47 percent increase on the same time last year, Mobinil said.

Marise Ananian, analyst at investment bank EFG-Hermes, said the ARPU performance was better than expected after Mobinil cut tariffs in April for on-net calls by between 30 and 50 percent.

"We had expected a decline in ARPUs in the short term. But the positive elasticity came earlier than expected," she said.

EFG-Hermes had expected a decline in ARPUs to 44.7 pounds a month for the second quarter and net income of 394 million pounds.

Mobinil made a one-off gain of 54 million pounds in the second quarter when it won a tax dispute with the Egyptian authorities, Ananian said.

The company said earnings before interest, taxation, depreciation and amortisation (EBITDA) rose 8.5 percent in the second quarter to 1.062 billion pounds. Global revenue rose to 2.441 billion pounds from 2.083 billion a year earlier. (Reuters)

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