Monday, May 14, 2012

--First-quarter net profit edges up 1.7% on cost cutting and broadband subscriber adds

--Signs emerging that Egyptian business environment is stabilising

--Vodafone Egypt revenues grow 7.5% in quarter compared with year ago period

(Adds CEO comments in paragraphs 9 and 10.)

By Shereen El Gazzar

Of ZAWYA DOW JONES

DUBAI (Zawya Dow Jones)--State-owned Telecom Egypt said Monday there are signs that the business environment in Egypt is stabilising after a tumultuous 2011, as the only provider of fixed-line services in the country posted a 1.7% rise in first-quarter net profit due to cost cutting and a surge in broadband subscribers.

Telecom Egypt's net profit in the three months ended March 31 amounted to 912 million Egyptian pounds ($151 million), up from EGP897 million in the year earlier period, it said in a statement.

The latest quarterly result exceeded the EGP649 million estimate of Cairo-based investment bank Beltone Financial, and beat the EGP814 million result predicted by analysts at CI Capital.

"Our cost optimisation program is delivering tangible benefits and ensuring that our margins are protected," said Tarek Aboualam, Telecom Egypt's chief executive officer and managing director.

Total consolidated revenues in the latest three-month period rose 12% on the year to EGP2.68 billion, while earnings per share in the same period was unchanged at EGP0.53.

Telecom Egypt said TE Data, its internet and data division, had reached 1.16 million subscribers by the end of March, up 24% on the year.

"TE Data's broadband footprint leads the market, with on average more than 50 thousand net new subscribers joining its service every quarter for the past three years," said Aboualam.

Vodafone Egypt, in which Telecom Egypt has a 45% stake, reported revenues of EGP3.05 billion in the three month period to March 31, a 7.5% increase on the same period a year ago.

Telecom Egypt's Aboualam told Zawya Dow Jones on a later conference call that he expects the Egyptian Ministry of Communications and Information Technology, to issue a tender for the country's first in about three months time.

"It's too early [to say if we will apply for the licence] because we have to look at the rules and conditions," he said. "What we always said is that we want to be a total [telecoms company] and MVNO could be a good opportunity however when the rules and condition are published we have to study them before any commitment."

The telco has repeatedly shown interest in tapping into the lucrative market by becoming a fully integrated operator, besides owning a near majority stake in Vodafone Egypt.

Telecom Egypt shares last traded Monday 0.8% lower at EGP12.90.

-By Shereen El Gazzar, Dow Jones Newswires, +9714 446 1684 Shereen.elgazzar@dowjones.com

(Farah Halime in Cairo contributed to this article.)

Copyright (c) 2012 Dow Jones & Co.

(END) Dow Jones Newswires

14-05-12 0919GMT