Telecom Egypt reveals 11% drop in net profit in 2Q11 amid continued rebuilding costs
Egyptian fixed line incumbent Telecom Egypt (TE) has revealed an 11% year-on-year decline in net profit for the three months ended 30 June 2011, with the telco attributing the drop in part to continued costs related to the political uprising that took place in the early part of 2011.
In the company’s second fiscal quarter of 2011 it posted a net income of EGP826 million (USD139 million), down from EGP926 million in the same period a year earlier, with TE noting that the ‘relative decline in net profit can be attributed to higher repair and maintenance costs, the commencement of operations in TE’s cable business, a decline in investment income and the impact of the increase in corporation tax from 20% to 25% effective from 1 March 2011.’
Revenues in 2Q 2011 meanwhile stood at EGP2.61 billion, which while up compared to the EGP2.40 billion reported in the previous quarter, represented a 3.7% y-o-y drop. Earnings before interest, tax, depreciation and amortisation (EBITDA) in the three-month period under review were EGP1.25 billion.
In operational terms, at end-June 2011 TE reported that its broadband subscriber base had passed the one million mark for the first time, with the telco revealing that high speed internet accesses totalled 1.017 million, up from just over 741,000 a year earlier. Further, TE noted that it its internet unit TE Data had recorded a 48% increase in new ADSL subscribers on the number added during the first three months of the year.
Commenting on the company’s fortunes in the wake of the February 2011 uprising, TE chairman Akil Bashir noted: ‘While the immediate effects of the Egyptian revolution started to subside during the quarter, the prevailing operating environment has yet to normalise in Egypt. Government curfews were fully lifted in mid-June, but tourism levels and business activities remain low and we continue to experience higher levels of copper cable theft than would be the case under normal conditions.
While management has worked hard during the period to stabilise our operations and manage this highly fluid situation with sensitivity, there are still many things to work through. For example, the free reconnections we made in interests of public safety and security during the height of the disruptions in Egypt have yet to fully work through to our subscriber base. Some have already returned as active customers. I expect that, as a result, there will be some further movement in the overall total number of subscribers we report today over coming quarters.’