Revenues leap but profits slip at Orascom
Egyptian mobile operator Orascom Telecom has posted a massive growth in revenue over the last year, but profits have slipped slightly after 12 months of expansion
Egypt-based Orascom, which owns and operates mobile phone networks across the Middle East and Africa, posted a small drop in profits for the year 2000 after spending millions on an aggressive expansion policy.
Net profits for the Cairo company dropped two percent from US$9.77 million in 1999 to $9.62 million last year. In the same timeframe, Orascom has increased the number of networks it runs ninefold.
As a result, revenues more than doubled to $559 million, as did operating profits and earnings before interest, taxes, depreciation and amortisation (EBITDA).
“With eight new cellular networks on air in 2000, Orascom Telecom is now the main regional operator,” said an OT spokesman. “This momentum has continued with recent start-ups in Yemen and Syria. This brings the total number of networks on air to 18, compared to two at the end of 1999.”
In spite of OT’s own bright outlook, not all analysts are happy with the fast-growing company’s explanation.
“OT results are not very positive,” said Yasser el-Masry, head of trading and a board member at El Eman Securities. “The profit figure is disappointing.”
HSBC Middle East telecoms analyst Manal Ezz el-Din was more supportive, telling Reuters that OT had shown “strong” year-on-year growth. Although profits were slightly below HSBC’s expectations, she believed they had simply been eroded by the start-up costs incurred in the installation of 16 new networks.
OT’s stock price wobbled a little when the results were released, but eventually settled back to its original level.