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Rise in profit for Telecom Egypt

Net profit increases 72% but fixed-line subscriber base shrinks

Telecom Egypt experienced a 72% rise in year-on-year profit according to the company’s latest quarterly results.

Net profit for the first three months of the year stood at EGP961 million (US$170.9 million), while earnings before interest, tax, depreciation and amortisation (EBITDA) grew 12% year-on-year to EGP1.35 billion ($240 million), beating analysts forecasts.

However, Egypt’s incumbent fixed-line operator experienced a drop in the number of users of its fixed-line services, from 11,702,539 at the end of December last year to 11,546,420 by the end of March.

The number of ADSL internet customers continued to increase quarter-on-quarter, with an extra 53,000 customers added during the first three months of the year to 476,544, an 83% increase on the same period last year.
Voice revenue fell 4% to EGP680 million ($121 million), which the operator claimed was a result of the competition from the wireless sector.

Akil Beshir, chairman and CEO of Telecom Egypt, said: “While voice revenue continues to experience some pressure from mobile substitution, our extensive and modern network enables us to reap the benefits of the resulting increase in mobile traffic through our wholesale revenues which increased 11% year-on-year.”

Wholesale revenue accounts for 42% of Telecom Egypt’s total revenue base.

He added: “Telecom Egypt continues to benefit from its investment in Vodafone Egypt, which has increased its customer base by 35% and total voice minutes by 36% year-on-year.”

Telecom Egypt has a 44.95% holding in Vodafone Egypt, one of the three Egyptian mobile operators.

Analysts predict that mobile operators in Egypt will see growth in subscriber numbers cut by a third this year as the market for mobile phones reaches saturation.

Last week, head of telecoms research at EFG-Hermes, Marise Ananian, said she expected 8 million new subscribers to be added to Egypt's three mobile operators in 2009, after 12 million subscribers were added in 2008.

"We assume market saturation in Egypt will be at 80%-85%. The mobile penetration rate was at 55% at the end of 2008 and there is still room for growth," she told Reuters.

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