Wednesday, May 15, 2013

(This story was originally published Tuesday.)

DUBAI (Zawya Dow Jones)--Telecom Egypt, the country's sole fixed line provider, posted a 6.2% decrease in first-quarter profit as expenses rose on the back of higher salaries and interconnection costs.

Net profit for the first three months of the year amounted to 858 million Egyptian pounds ($123 million), a drop from EGP914 million in the year ago period, Telecom Egypt said in a statement on the London Stock Exchange on Tuesday. Revenue in the same period was up 1.4% to EGP2.7 billion, while earnings per share for the period was EGP0.50, the company said. Analysts at Beltone Financial had forecast a first quarter net profit of EGP500 million.

Telecom Egypt said the contribution to profit from its 45% stake in Vodafone Egypt was EGP227 million for the first quarter. The telco said it ended the quarter with 7.2 million fixed-line subscribers and 1.4 million retail ADSL, or asymmetric digital subscriber line, customers.

"We have seen a notable increase in international wholesale traffic, year-on-year, as a direct result of the framework and agreements which we started to put into place from 2011," Mohamed Elnawawy, managing director and chief executive of Telecom Egypt, said in the statement. "For every outbound minute we receive 10 inbound minutes."

The National Telecommunications Regulatory Authority announced in December it would allow Telecom Egypt, which is 80% owned by the government, to join three existing private telcos--Vodafone Egypt, Mobinil and Etisalat Misr--in offering mobile services. The regulator will also eventually allow private mobile companies to establish fixed-line systems on existing infrastructure owned by Telecom Egypt, which enjoys a monopoly on land lines.

Telecom Egypt plans to launch mobile services in the third quarter and will consider investing in a 4G network next year, the company said in March. It doesn't expect to be forced to sell its stake in Vodafone Egypt for regulatory purposes and is expecting a decision on the cost of the licence in June, it added in March.

Telecom Egypt shares closed Monday at EGP13.40.

Write to Rory Jones at rory.jones@dowjones.com

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(END) Dow Jones Newswires

15-05-13 0341GMT