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Orascom Telecom doubles profit

Egyptian operator sees net income rise 116% to $1.3bn in nine months to end of September as subscribers jump.

Orascom Telecom, the fourth-largest Arab mobile operator by market value, said nine-month net profit more than doubled as the number of its subscribers jumped.

The company said on Monday net profit rose 116% to $1.3 billion in the nine-months to the end of September.

Profit in the third quarter was $274 million (1.513 billion Egyptian pounds), the second-biggest quarterly profit in at least two years. Analysts had forecast between 1.1-1.2 billion pounds.

"Profit was 3.3% above our expectations due to the jump in revenues as the company kept in control of operating expenses," said Walaa Hazem, head of research at HC Securities.

Nine-month consolidated revenue rose 23% to $3.47 billion, while consolidated earnings before interest, tax, depreciation and amortisation (EBITDA) was $1.49 billion, up from $1.21 billion in the same period of 2006.

The number of Orascom Telecom subscribers jumped 47% from September 2006 to 64.7 million.

"So it was normal to see the average return per user ARPU decline," Hazem said.

ARPU was $7.10 in the third quarter from $7.3 in the second quarter and $8.5 in the third quarter of 2006. Most of the new subscribers were pre-paid users, he added.

Capital expenditure as a proportion of sales also declined in the first nine months to 37.4% from 44% a year earlier.

Hazem said the declining capital expenditure and the sale of operations in Iraq and elsewhere enabled the company to finance expansion.

Orascom Telecom chairman Naguib Sawiris told Reuters on Sunday it would probably sell its Algerian fixed-line joint venture Lacom to a Palestinian-Jordanian company, and was mulling expansion in Asia, including in North Korea.

Orascom Telecom said on Saturday it has agreed to sell its Iraqi mobile phone unit for $1.2 billion to Kuwait's Mobile Telecommunications Company (Zain), to quit the strife-torn country.

ING Brokerage maintained its "hold" rating and a price target of 78.1 pounds on Orascom Telecom stock on Monday saying that third-quarter results "do not bring any excitement as such, although if properly adjusted and analysed, there is not too much disappointment either".

Shares in the firm, with a market capitalisation of 92.48 billion pounds, were 0.94% higher to 85.80 pounds by 1149 GMT. (Reuters)

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