|21 February, 2019

Telecom Egypt's stock worst performer on EGX30 after reporting earnings below estimates

The company reported a consolidated net loss of EGP21.9million for the final quarter of 2018

A billboard of Telecom Egypt is seen in Cairo, Egypt September 12, 2017.

A billboard of Telecom Egypt is seen in Cairo, Egypt September 12, 2017.

REUTERS/Amr Abdallah Dals

Shares in Telecom Egypt fell on Thursday, after the company reported a loss for the fourth quarter (Q4) of the year 2018.

The company announced a Q4 2018 consolidated net loss after tax of 21.91 million Egyptian pounds (EGP, or $1.25 million), compared to a net loss of 430.68 million pounds in Q4 2017.

Telecom Egypt reported a full year 2018 consolidated net profit of 3.48 million pounds compared to 3.05 million pounds in 2017, a 14.1 percent year-on-year increase.

Rami ElSirgany, research analyst at Naeem Brokerage told Zawya by email that the company’s performance was poor overall, adding that the Q4 results fell “short of ours (Naeem Brokerage) and consensus estimate of EGP890m (net profit) and EGP966m, respectively, by a big margin.”

Q4 2018 consolidated revenue amounted to 5.41 billion pounds, compared to 5.44 billion pounds in Q4 2017, with mobile subscribers by the end of 2018 reaching 3.9 million. Compared to Q3 2018, revenues dropped 25 percent quarter-on-quarter.

Naeem Brokerage’s ElSirgany said that the quarter-on-quarter drop in revenues could be attributed to weak international customers & networks sales “due to the absence of cable projects and lower capacity sales”.

Telecom Egypt’s board of directors proposed a dividend of 0.25 pounds per share for 2018.

The company’s shares were the worst performers on Egypt’s blue-chip index during Thursday’s trading session, dropping 4.51 percent and dragging EGX30 to close 0.44 percent lower. Telecom Egypt’s shares have gained 16 percent so far since the start of 2019.

“We continue to recommend ETEL (Telecom Egypt) as a BUY with a TP (target price) of EGP 18.3/share,” ElSirgany concluded. The company’s stock was last trading at 14.6 pounds on Thursday.

According to data from Eikon, two analysts had a ‘strong buy’ rating on the company’s stock, five analysts had a ‘buy’ rating and one analyst had a ‘hold’ rating.

Elsewhere in the region, Dubai’s index ended Thursday’s session mainly flat, Abu Dhabi’s index gained 0.74 percent, Saudi Arabia’s index dropped 0.23 percent, Qatar’s index added 1.13 percent, Kuwait’s premier market index edged 0.39 percent higher while Bahrain and Oman’s indices were mainly flat.

(Reporting by Gerard Aoun; Editing by Michael Fahy)

(Gerard.aoun@refinitiv.com)

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© ZAWYA 2019

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