Sunday, Feb 26, 2012

(this story was originally published on Thursday)

By Shereen El Gazzar

Of ZAWYA DOW JONES

DUBAI (Zawya Dow Jones)--State-owned Telecom Egypt, the only provider of fixed-line services in the country, posted a broadly flat fourth-quarter profit Thursday of 584 million Egyptian pounds ($96.8 million) and said it expects to apply for a Mobile Virtual Network Operator, or MVNO, license by the end of March.

"We are still very much interested and we are following it [the MVNO], we expect the NTRA [National Telecommunication Regulatory Authority] to issue its final conditions, we expect this to happen within the first quarter," Tarek Aboualam, chief executive officer and managing director of Telecom Egypt told Zawya Dow Jones on a post results call. "Once these conditions are published, depending on the conditions, we will go after it."

Telecom Egypt posted a fourth-quarter net profit of EGP580.9 million in 2010, according to Zawya.com data. Earnings per share for 2011 came in at EGP1.49, down from EGP1.62 in 2010.

The latest quarterly result exceeded the EGP487 million estimate of Cairo-based investment bank CI Capital, but fell short of the EGP741 million result predicted by EFG-Hermes.

"Since the January revolution and the resulting economic slowdown in Egypt, the local call revenues category, the largest component of retail voice revenues, has experienced particular pressure," Telecom Egypt said in an emailed statement. "Furthermore, business activity, including tourism, has yet to normalize, which has acted as a short-term drag on fixed-to-international calls in particular," it added.

Mohamed Hamdy, a telecoms analyst at CI Capital, described Telecom Egypt's performance in 2011 as exceptional given the significant unrest in the country, stolen copper cables, slowing tourism and business activity, a higher corporate tax rate of 25% and the extraordinary increase in salaries.

"We maintain our positive view on the fundamentals of Telecom Egypt given its diversified business model and robust net cash position," he added.

Aboualam told Zawya Dow Jones the company is targeting more profitable customers through increased promotions. The telco's total number of fixed line subscribers stood at 8 million at the end of December.

"To defend our voice only customers we are continuing to do promotions to maintain the segments of the customers that are profitable for us," said Aboualam, adding that the company is continuing successful promotions that it started last year to maintain its customer base and reduce churn.

Telecom Egypt said that its board of directors will recommend a final dividend distribution of EGP1.1 a share at its annual shareholder meeting in March, making total dividends per share EGP1.4.

Total revenue at the telco declined 3.2% in 2011 to EGP9.9 billion.

"We expect a flat revenue in 2012. We expect our earnings before interest, taxes, depreciation and amortization, or ebitda, margin in 2012 to settle within the mid 40s as well and capital expenditure to be between EGP1-1.2 billion," Hassan Helmy, the company's chief financial officer, told Zawya Dow Jones on the post results call. Ebitda was EGP4.6 billion in 2011, or a margin of 46%, according to a company's financial statements.

Telecom Egypt shares last traded up 2% at EGP15.98 in Cairo.

-By Shereen El Gazzar, Dow Jones Newswires; +971 444 61684; Shereen.elgazzar@dowjones.com

Copyright (c) 2012 Dow Jones & Co.

(END) Dow Jones Newswires

26-02-12 0343GMT