Telecom Egypt shows some signs of vitality

'Ancient' hardware still attractive for subscribers, profits.

In the era of smartphones, the fixed-line market is looked on as not just ageing but ancient. Telecom Egypt showed yesterday that it still has plenty of life left. Egypt's fixed-line monopoly said second-quarter profit rose 23 per cent, beating analyst estimates, as the number of subscribers increased and margins widened.

Net income advanced to 971 million Egyptian pounds from 789m pounds in the second quarter last year. "Its results show the resilience of its fundamentals," said Mohamed Hamdy, an analyst at CI Capital Research. "The company is growing despite the fierce competition in the market, particularly among mobile users." Second-quarter sales rose 1.1 per cent to 2.71 billion pounds. The company added a net 64,574 broadband subscribers, compared with 25,613 a year earlier, for a total of 741,046. Fixed-line subscribers increased 110,000 in the quarter for a total of 9.4 million.

"We continue to capture growth in mobile and data markets," said Tarek Tantawy, the chief executive of Telecom Egypt. "Net profit margins continue to expand over the period, as a result of cost control and our long-standing investment in Vodafone Egypt." The net profit margin widened to 35.9 per cent from 29.5 per cent. Income from the state-owned company's 44.95 per cent stake in Vodafone Egypt was 730m pounds in the first half of the year.

"Telecom Egypt has been successful in managing the stiff competition it has been facing from mobile operators," CI Capital said in a report yesterday. Vodafone said on June 1 it had ended talks to sell its stake in the Egyptian unit to Telecom Egypt. Telecom Egypt may seek investors to make a renewed bid for the stake, an informed source said in June. The company has declined to comment. Telecom Egypt shares were little changed at 17.09 pounds on the Cairo exchange yesterday.

* with Bloomberg