Egyptian Orascom reports weak first half on back of currency devaluation

Mergers, Acquisitions and Financial Results

Egyptian telecoms group Orascom Telecom has released its financial results for the six months ended 30 June 2009, posting a 6.5% decline in consolidated group revenue to USD2.48 billion, down from USD2.65 billion a year earlier.

The company cited currency devaluations in some of its key markets as a significant factor in the fall. Mobilink, Orascom’s Pakistani GSM unit, reported a 21.4% drop in revenue in the six-month period to USD529 million; by comparison, in the unit’s local currency, revenues only fell by 1.8%. Algeria’s Djezzy also posted a decline in revenue of 4.7% to USD941 million, while in local currency the cellco actually saw revenues increase by 6.7%. Revenue from Orascom’s GSM units totalled USD2.31 billion in 1H 2009, down 2.8% from USD2.37 a year earlier. Consolidated earnings before interest, tax, depreciation and amortisation (EBITDA) for the six-month period fell 5.3% year-on-year to USD1.13 billion, while net profit slumped 30% compared to the same period in 2008 to USD213.9 million.

Orascom reported subscriber growth for all of its GSM operations except those in Pakistan; Mobilink saw a 9% decline in its customer base to 29.1 million, although this was up almost a million from end-March 2009. The group’s total GSM subscriber base rose 8.7% y-o-y to reach 84.1 million at end-June 2009.

Commenting on the results, Naguib Sawiris, chairman and CEO of Orascom, said: ‘The first half of 2009 was characterised by a weak first quarter followed by a stronger Q2; nevertheless the economic environment in which we are operating is still challenging and we see only timid signals of economic growth returning. In this context we are satisfied that our performance to date this year is in line with our forecasts, which predict a slower growth than in the same period of 2008.’

Telegeography