MERGERS, ACQUISITIONS AND FINANCIAL RESULTS

MOBINIL 1H PROFIT SLIPS, DESPITE STEADY REVENUE GROWTH; DELAYS 3G DECISION

The Egyptian Company for Mobile Services (ECMS), which offers services under the brand name MobiNil, has reported a 3% fall in net profit for the first half of 2006, down to EGP657 million (USD114 million), despite a 14% rise in revenues to EGP2.912 billion. EBITDA rose 11% to EGP1.465 billion. MobiNil launched EDGE services during the period and introduced Egypt’s first pre-paid call plan offering per-second billing. It ended June with 7.321 million mobile subscribers.

ECMS also announced that it would need more time to decide whether to apply for a 3G licence. The National Telecommunication Regulatory Authority (NTRA) had previously stated that the cost of a standard 3G licence for any other operator wishing to upgrade their 2G concession would be equal to 20% of the winning bid for the recently auctioned third mobile licence. Last month the regulator selected a consortium led by Etisalat of the UAE as winner of the combined 2G and 3G operating concession. The winning bid is reportedly worth EGP16.7 billion (USD2.89 billion), almost eight times the minimum offer, putting the cost of a 3G licence upgrade at around USD578 million. On top of licence fees, operators are also required to pay annual royalties to the state. The inflated cost has now forced ECMS to rethink its 3G strategy.

Meanwhile, ECMS shareholder Orascom Telecom has announced that it is interested in buying up to a further 3.5% stake in the company. Orascom owns a 16.6% stake in ECMS as well as 28.75% of MobiNil Holding, which owns 51% of ECMS. Orange holds the remaining 71.25% stake in MobiNil Holding

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