Telecom Egypt S.A.E TEEG Q3 2012 Results

  Telecom Egypt S.A.E (TEEG) - Q3 2012 Results

RNS Number : 8540Q
Telecom Egypt S.A.E
12 November 2012

       Telecom Egypt Announces Third Quarter 2012 Consolidated Results

Cairo, 12 November 2012: Telecom Egypt (TE) (Ticker: ETEL.CA; TEEG.LN),  today 
announced its interim  consolidated financial  results for  the third  quarter 
ending  30  September  2012.  Financial  statements  have  been  prepared   in 
accordance with Egyptian Accounting Standards.

Highlights for the third quarter of 2012 include:

§ 6% revenues growth to EGP 2,477 million on Q3 2011.

§ EBITDA of EGP 911 million.

§ Net Profit After Tax of EGP  633 million, representing a net profit  margin 
of 26% and a 3% increase; when compared to the same period in 2011.

§ Earnings Per Share(EPS) growth of 3% to 0.37 onQ3 2011.

§ Positive contribution of  share of profits from  Vodafone Egypt of EGP  232 
million, up 3.4% on the previous year.

§ As at 30 September  2012, total fixed line  subscribers of 7.5 million,  of 
which 2.1 million are higher yielding double-play subscribers.

§ Retail ADSL subscribers increased 20%  (net), delivering a 10% increase  in 
internet and data revenues when compared to the same period in 2011.

Chief Executive Officer's Statement


Commenting on the third quarter  results of 2012, Mohamed El-Nawawy,  Managing 
Director and Chief Executive Officer of Telecom Egypt (TE), said:

"TE continues to outperform its peers and exceed market expectations. We have
delivered strong operational  performance across our  diverse business  lines, 
which once again translated to an impressive set of financial results. With  a 
healthy balance  sheet  and  strong  cash  generation  profile,  we  are  well 
positioned and well financed to move forward against our objective of becoming
a total telecoms operator as and when government licensing begins.

"TE Data continues to make significant progress. Having grown by 9.9% compared
to the same period in 2011, broadband revenues now represent over a quarter of
our total retail revenues. Net ADSL subscriber additions in the third  quarter 
2012 were 60.8%  higher than those  achieved in the  third quarter 2011.  This 
resilient growth in data services  made a significant contribution during  the 
third quarter. This compensated for any pressure on our retail voice business,
which resulted from aggressive mobile competition.

"TE's wholesale business  continued the  trend of  strong growth  seen in  the 
first half of the year, growing revenues by nearly 5.7% to EGP 1,253  million. 
Domestically our wholesale business  recorded revenues of  EGP 328 million  an 
increase of  nearly 11.7%  year  on year  whilst our  international  wholesale 
business grew  by  almost  3.8%. In  particular,  our  international  capacity 
business contributed nearly EGP 140  million of recurring, stable  operational 

"Our investment in  Vodafone Egypt  (VFE) continues  to outperform,  reporting 
voice minutes of 44.8 billion for the six month period to 30 September 2012, a
19.7% increase on the same period last year. Total revenues were up by  4.0%, 
reaching EGP 3,210 million compared with the previous quarter.

"In conclusion, we have had a very strong quarter where we have grown revenues
and managed our  costs. The growth  of our broadband  and wholesale  business, 
coupled with the solid  performance of our investment  in Vodafone Egypt,  has 
allowed us  to  sustain attractive  margins  and  positions us  well  for  the 

Financial Review


Total consolidated revenues for the nine month period 2012 were up 2.8% to EGP
7,544 million, from EGP  7,342 million during the  same period in 2011.  Total 
consolidated revenues for the quarter increased 5.6% when compared to Q3 2011,
reaching EGP 2,477 million.

Retail Services

Retail revenues  totaled  EGP  1,224  million for  Q3  2012,  representing  an 
increase of 5.4% compared to Q3 2011, and 6.7% on Q2 2012. While there was  an 
overall drop in voice  revenues, this decline is  decelerating as we focus  on 
offering our customers greater  value and service. In  the third quarter  this 
was more than  offset by  the continued  positive growthin  revenues from  TE 

Comprising connections and  subscriptions, access revenues  were down by  7.9% 
year on year, but grew  by 0.9% quarter on quarter  to reach EGP 344  million. 
The increase quarter on quarter was due to promotional activity during the  Q3 
2012 period, which resulted in nearly 37,000 new subscribers.

We saw uplift in  fixed to mobile interconnections  during the quarter due  to 
Ramadan, while promotional activity also  played an important role in  growing 
our long distance revenues. Our total voice revenues for Q3 2012 were EGP  365 
million,  down  2.8%  and  12.4%  when  compared  to  Q2  2012  and  Q3   2011 

Offsetting these declines during the third quarter, revenues from TE Data grew
by 9.9% year  on year, as  demand for high-quality  ADSL internet  connections 
continues to strengthen. Net ADSL subscriber additions of 50,866 in the  third 
quarter 2012 were 60.8% higher than those achieved in the third quarter  2011, 
resulting in a 60.3% market share.

Wholesale Services

Telecom Egypt's wholesale  business is made  up of revenue  from domestic  and 
international services  to operators  who  use Telecom  Egypt's  international 
gateway and extensive digital infrastructure, principally for co-location  and 
transmission services and infrastructure leasing.

After robust growth in the first  half of the year, TE's underlying  wholesale 
services business has shown another strong performance in the third quarter of
2012, recording revenues  of EGP 1,253  million, an increase  of 5.7% year  on 
year and 0.9% quarter on quarter.During  the period the Mobinil agreement  was 
signed, securing TE longer term revenues over the next three years.

Total wholesale revenues  accounted for 50.6%  of total consolidated  revenues 
for the third quarter 2012.

Domestic wholesale revenues were EGP 328  million in Q3 2012, compared to  EGP 
294 million in Q3 2011. The increase was driven by customer demand for greater
bandwidth and  capacity, particularly  in  our lease  line business  which  TE 
delivered during the period. 

Internationally,  our   wholesale   business   remains   strong   with   total 
international wholesale  revenues of  EGP 925  million for  the third  quarter 
2012, representing 73.8% of TE's wholesale revenues.

TE's international  capacity business  reported revenues  of EGP  139  million 
during the quarter.  This represented the  stable and long  term capacity  and 
maintenance revenues associated with  the cables post-delivery. Revenues  from 
the cable business now account for 11.1% of TE's total wholesale revenues.


EBITDA for  the  period amounted  to  EGP 911  million,  a reduction  of  9.1% 
compared to the same period in 2011. The decline during the period was  driven 
by cost increases  relating to  salaries, the back  dating of  interconnection 
costs due to the Mobinil agreement and higher maintenance costs, reflecting  a 
return to normality of the Egyptian operating environment.

The EBITDA margin for the nine month period 2012 was 42.4%, fractionally lower
than management's expectations, principally due to the agreement with Mobinil.

Income from Investments

Total Income  from investments,  mainly representing  TE's stake  in  Vodafone 
Egypt (VFE), for Q3 2012 was EGP 235 million.

During the second quarter  of 2012/2013, VFE generated  revenues of EGP  3,210 
million, representing growth of  4.0% on the first  quarter in 2012/2013.  VFE 
had 833,000 net new customers during its second quarter to 30 September  2012, 
bringing total customers up to 38.5  million, an increase of 8.2% compared  to 
the same period in 2011.

(Note: Vodafone Egypt's financial year is from 1 April to 31 March).

Net Profit

Telecom Egypt's Consolidated Net  Profit for Q3 2012  reached EGP 633  million 
versus EGP 613 million in Q2 2012 and EGP 615 million for Q3 2011, an increase
of 3.3% and 3.0% respectively. This translates to an EPS of EGP 0.37.

The net profit margin for the nine month period 2012 was 28.6%.

Investments in Infrastructure

Capital expenditure (Capex) in Q3 2012  reached EGP 90 million versus EGP  146 
million in Q3 2011.  The reduction in  Capex spend during  the quarter can  be 
attributed to the  revision of  contractual agreements,  leading to  effectual 
negotiations with  all  suppliers on  terms  and conditions  with  competitive 

Net Cash

Telecom Egypt continues to boast a very healthy balance sheet, with a  prudent 
net cash position of nearly EGP 5.0 billion at 30 September 2012.

TE Financial Highlights

                                             In EGP Millions (Except Per Share
Nine months
Ending Sept
30, 2012
                9M 2012   9M 2011  % Change  Q3 2012     Q2 2012     % Change
Sales Revenue    7,544     7,342     2.8%     2,477       2,388        3.7%
EBITDA           3,200     3,525    -9.2%      911         900         1.2%
Margin           42.4%     48.0%             36.8%       37.7%         

EBIT             2,342     2,478               652         669
                                    -5.5%                             -2.6%
Margin           31.0%     33.8%             26.3%       28.0%         
Profit Before
Taxes &          2,641     2,785              769         736          
Interest                            -5.2%                              4.5%
Consolidated     2,159     2,325               633         613
Net Profit                          -7.2%                              3.3%
Net Profit                                                             
Margin           28.6%     31.7%              25.6%       25.7%

EPS (EGP)        1.26      1.36     -7.2%      0.37        0.36        3.3%


TE Operational Highlights

                    9M 2012   9M 2011   % Change   Q3 2012   Q2 2012    %    
ARPU (EGP/Month)     57.6      55.4       3.9%      57.9      57.6     0.5%  
CAPEX (EGP 000's)   305,367   497,027    -38.6%    89,791    124,753  -28.0% 
TE Data                                                                      
 - Number of     1,256,747 1,049,277   19.8%    1,256,747 1,205,881  4.2%  
ADSL Subscribers
     -      ADSL 
Subscribers    Net  145,524   166,106    -12.4%    50,866    45,180   12.6%  
 - Retail ADSL     60.3%     63.0%     -4.3%      60.3%     60.5%   -0.4%  
Market Share

 Vodafone Egypt Financial Highlights

                                                    In EGP Millions
              9M 2012 9M 2011 % Change Q2 12/13  Q1 12/13  % Change
Total Revenue  6,296   6,129    2.7%    3,210    3,086   4.0%
Net Profit     1,037   1,017    2.0%     516       521      -1.0%
CAPEX           729     596    22.4%     461       268      71.6%

Vodafone Egypt Operational Highlights

                           9M 2012 9M 2011 % Change Q2 12/13 Q1 12/13 % Change
Closing Customers (000's)  38,454  35,535    8.2%    38,454   37,621    2.2%
Net Adds (000's)            1,252   3,317   -62.3%    833      419     98.6%
Total Voice Minutes        44,818  37,446   19.7%    22,394   22,424   -0.1%


To download a complete copy of Telecom Egypt's Q3 2012 Consolidated  Financial 
Results Statements and notes to these statements, please refer to the attached

To download a complete  copy of Telecom Egypt's  Q3 2012 Standalone  Financial 
Results Statements and notes to these statements, please refer to the attached


                                   - Ends -

For Further Information:

Investor Relations Contacts

Ahmed Labib                                Mohamed Kamal
Director of Investment & Investor          General Manager of Investor
Relations                                  Relations
Tel: +202 3131 5225                       Tel: +202 3131 5219
Fax: +202 3131 6115                        Fax: +202 3131 6115


Notes to Editors:

Within this statement, we may make forward-looking statements regarding future
events or  the  future performance  of  the  Company. By  their  very  nature, 
forward-looking statements  involve  inherent risks  and  uncertainties,  both 
general and  specific,  and  risks  exist  that  the  predictions,  forecasts, 
projections and other  forward-looking statements  will not  be achieved.  You 
should be aware that a number of important factors could cause actual  results 
to differ materially from the  plans, objectives, expectations, estimates  and 
intentions expressed  in  such  forward-looking statements.  When  relying  on 
forward-looking statements,  you  should  carefully  consider  the  political, 
economic, social and legal environment  in which Telecom Egypt operates.  Such 
forward-looking statements speak only  as of the time  of this release  today. 
Accordingly, Telecom  Egypt does  not undertake  any obligation  to update  or 
revise any of them, whether as a  result of new information, future events  or 
otherwise other than  as required  by applicable  laws, the  Listing Rules  or 
Prospectus Rules  of  the  United  Kingdom  Listing  Authority,  the  Egyptian 
Financial Supervisory Authority or The Egyptian Exchange. The documents  filed 
from time to time with these  authorities may identify important factors  that 
could cause actual results  to differ materially from  those contained in  any 
forward-looking statements.

About Telecom Egypt

Telecom Egypt (TE), Egypt's incumbent telecommunications operator, started its
operations in 1854 with the first telegraph line in Egypt. Then it was
corporatized in 1998 to replace the former Arab Republic of Egypt National
Telecommunication Organization (ARENTO). The Company is the largest provider
of fixed-line services in the Middle East and Africa with 7.5 million
subscribers as at 30 September 2012.

TE provides retail telecommunication services including access, local, long
distance and international voice, Internet and data, and other services. The
company also provides wholesale services including bandwidth capacity leasing
to ISPs, and national and international interconnection services. Telecom
Egypt's services also include the provision of narrowband and broadband
internet access through its subsidiary TE Data. TE Data has active operations
in Egypt and Jordan.

TE currently participates in the mobile segment in Egypt by providing mobile
interconnectivity through its current, increased 44.95% holding in Vodafone
Egypt, one of the three existing Egyptian mobile operators.

TE's shares and GDRs (Ticker: ETEL.CA; TEEG.LN) are traded on The Egyptian
Exchange and the London Stock Exchange.

                     This information is provided by RNS
           The company news service from the London Stock Exchange


QRTLIFLDLALFLIF -0- Nov/12/2012 07:24 GMT
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