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Friday, Mar 23rd

Telecom Egypt - settlements haven't dented performance

Telecom Egypt - settlements haven't dented performance

Telecom Egypt says its settlements with rival mobile network operators Orange and Etisalat have not had a major impact on its performance, and this is reflected in its financial results for the year ending 31 December 2017.

The telco settled its dispute with Orange relating to interconnection, leased lines and international services in November last year before securing another settlement with Etisalat Misr over international call services in what it described as "a mark of the end of all disputes with all mobile operators".

Telecom Egypt paid Etisalat Misr US$48m to mitigate the risk of a potential loss of more than US$100m according to the settlement, and claims to have made a net positive cash flow of just over US$4m from the settlement with Orange.

Ahmed El Beheiry, Group Chief Executive at Telecom Egypt says the company delivered a strong operational and financial performance in FY 2017.

"Total consolidated revenue grew 33% y-o-y to EGP 18.6bn and normalised revenue grew 13% y-o-y on the continuation of fixed data services growth of 42% leading retail revenue to grow by 28% y-o-y. Telecom Egypt also reported an 18% growth in net profit in spite of the P&L (profit and & loss) impact of the settlements with Orange and Etisalat. Excluding such impact net profit would have grown even higher by 31% y-o-y."

El Beheiry regards the launch of Telecom Egypt's new brand identity and the new focus on customer care, as well as the creation of a new call centre as key achievements. He includes the settlement of all legacy legal disputes with mobile operators and the closing of several long-term agreements to secure wholesale revenue streams on this list.

"We have also continued to invest in our fixed infrastructure along with our new investments in mobile in order to provide our customers with the best data quality across all technologies with the aim of becoming the customer's first choice for total telecom services."

Telecom Egypt's in-service CapEx, including license fees for FY17, amounted to EGP 10.7bn compared to 10.0bn last year and cash CapEx reached 7.5bn compared to 8.6bn in FY16. Employee costs decreased to 27% of revenue from 33% the year before.

The financial reports also show that the total number of fixed broadband customers grew 20% y-o-y to reach 4.1m and fixed voice customers reached 7.1m in FY17 up 11% y-o-y. Mobile customers on the other hand closed the year at 2.3 million.

In January, Telecom Egypt Telecom Egypt announced the approval by its Board of Directors of a budget for the 2018 financial year which anticipates growth in revenue amongst other positive developments.

Among the key highlights of the 2018 Telecom budget is a forecast of total revenue growth in the range of "high single digit to low double digit" as well as EBITDA margin in the mid-to-high twenties and CAPEX to sales ratio of 30%. In its end of year financial results, Telecom Egypt management has proposed a dividend of EGP 1 per share for FY17 in line with FY16.


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