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Telecom Egypt Turns to ‘High-End’ Users as 2011 Profit Falls

Telecom Egypt (ETEL), the Arab country’s fixed-line monopoly, said it has increased efforts to generate revenue from “high-end” customers after profit fell 7 percent.

Net income dropped to 2.9 billion Egyptian pounds ($484 million) in 2011 from 3.1 billion pounds a year earlier, the Cairo-based company said in a statement on its website today. The average estimate of 16 analysts was for a profit of 2.85 billion pounds, according to data compiled by Bloomberg.

The number of fixed-line subscribers fell by more than 1 million to 8 million at the end of last year, Chief Executive Officer Tarek Aboualam said in a telephone interview today. In the same year, Telecom Egypt’s Internet service subscribers increased 26 percent to 1.1 million.

“We’re trying to focus on profitable customers more than keeping customers with low ARPUs without any real impact on our revenues,” Aboualam said, referring to average revenue per user. The drop in fixed-line users was “expected and controlled,” he said.

Telecom Egypt’s ARPU was at 53.5 pounds per month at the end of 2011 compared with 53 pounds a year earlier, according to the company.

Virtual-Network

The company plans to bid for a so-called virtual mobile- network operator’s license when it is offered by the government by the end of this quarter, Chairman Akil Bashir said by telephone today. If acquired, the license will “enhance” Telecom Egypt’s relationship with the country’s biggest mobile network operator Vodafone Egypt Telecommunications SAE (VODE), a company of which it already owns 45 percent, Bashir said. A VMNO license allows companies that want to offer mobile phone services to use the networks of existing operators.

Telecom Egypt’s board plans to recommend a 1.1-pound dividend when it meets next month after shareholders approved a 30-piaster payout in January, bringing the total to 1.4 pounds for 2011. That compares with a 1.3-pound dividend for 2010.

Shares of Telecom Egypt rose 2.2 percent, the most in more than a week, to 16 pounds at the 2:30 p.m. close in Cairo. That values the company at 27.3 billion pounds, and brings the stock’s rise this year to 21 percent.

To contact the reporter on this story: Ahmed A Namatalla in Cairo at anamatalla@bloomberg.net

To contact the editor responsible for this story: Claudia Maedler at cmaedler@bloomberg.net

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