Orascom 1Q11 net profit boosted by Tunisian unit sale

Mergers, Acquisitions and Financial Results

Egyptian telecoms group Orascom Telecom Holding saw a surge in first-quarter profits following the sale of its stake in Orascom Tunisia Holding and Carthage Consortium, through which it held 50% of Orascom Telecom Tunisia, for a total cash consideration of USD1.2 billion. With the company saying that it recognised a gain of USD754 million on the transaction after taking into consideration the 20% tax on capital gains in Tunisia and its associated investment cost, for the three months ended 31 March 2011 Orascom posted net income of USD812.755 million, up from USD48.806 million in the same period a year earlier. Consolidated turnover meanwhile rose by 5% year-on-year to USD949.249 million in the first three months of the year, with the increase driven by continued growth in revenues from the group’s wireless voice services across all units. North Korea’s Koryolink saw the largest y-o-y increase, reporting revenue growth of more than 180% against 1Q10, with turnover at USD25.671 million, while Algeria was the group’s largest contributor, accounting for revenues of USD438.585 million, up 6.3% against the same period in 2010. Consolidated earnings before interest, tax, depreciation and amortisation (EBITDA) for the three-month period were USD436.600 million, up 11.1% compared to the USD392.875 million reported in 1Q10.

In operational terms, at the end of March 2011 Orascom’s total subscriber base stood at 104.27 million, up from 90.198 million a year earlier when discounting the subscribers it previously had in Tunisia at the earlier date. Pakistan-based Mobilink was the group’s largest subsidiary in terms of wireless customers, reporting 32.7 million at end-March 2011, up 3.6% year-on-year, while North Korea saw the largest percentage increase over the year, with wireless accesses rising more than 400% to 535,133. Orascom also highlighted continued growth in Algeria, despite what it called ‘overwhelming obstacles’, which it said included restrictions on SIM imports, foreign currency transfer and advertising on government TV channels. In 1Q11 Algerian cellco Djezzy added just over 400,000 new customers, bringing its total to 15.509 million, up almost 5% against 1Q10.