Nov. 12 (Bloomberg) -- Telecom Egypt, the biggest fixed- line operator in the Middle East, said it expects to meet its revenue guidance for 2009 after third-quarter profit beat analysts’ forecasts.

Net income fell 13 percent in the quarter to 826 million Egyptian pounds ($151 million), the state-owned company said in a statement to the Regulatory News Service. The figure was 11 percent higher than the Bloomberg consensus estimate of 747 million pounds. Revenue fell 5.5 percent to 2.54 billion pounds.

“The guidance was for revenue to come in either flat or with a 1 percent growth and we are maintaining our guidance for the full year,” Chief Executive Officer Tarek Tantawy said in an interview today in Cairo. “We think we can achieve this.”

The number of fixed-line subscribers fell 15 percent to 9.6 million at the end of September from t the year-earlier period, the company said in the statement. Income from investments, including its 44.95 stake in Vodafone Egypt, rose 7 percent to 1.02 billion pounds.

Telecom Egypt had 61 percent of the broadband market at the end of September through its unit TE Data, the statement said. The company increased its broadband subscribers by 68 percent to 572,000 people, it added.

“I still see a huge potential when it comes to broadband penetration and this is driven by two things, first the current low penetration levels and secondly the attractive demographics of Egypt,” Tantawy said.

Egyptian Market

About 60 percent of Egyptians are under the age of 25 “and one-third of the population is under the age of 15 and those are naturally broadband customers for us in the future,” he said.

Telecom Egypt faces tough competition from the country’s three mobile-phone operators who offer significant reduction in call tariffs. The fixed-line operator’s response has included focusing on new services such as its so-called fiber-to-home, which it started offering to a Cairo suburb last month. The service offers customers access to voice, video and Internet through the same high-speed connection.

Tantawy said Telecom Egypt plans to offer the service to more communities in the suburbs of Cairo and Alexandria, Egypt’s second largest city, in “the course of the next 12 months.”

The Egyptian government has said it will offer two licenses to provide telecommunications services in closed residential compounds with up to 5,000 units. Larger compounds will continue to be serviced by Telecom Egypt.

Telecom Egypt shares were 0.4 percent down at 17.7 pounds at 11:06 a.m. in Cairo today.

To contact the reporter on this story: Alaa Shahine in Cairo at asalha@bloomberg.net

Last Updated: November 12, 2009 04:52 EST