Telecom Egypt Quarterly Net Drops 25% on Wholesale Decline

Telecom Egypt Co. (ETEL), the Arab country’s monopoly fixed-line phone company, said second-quarter profit dropped 25 percent from a year earlier as it didn’t deliver any submarine cable projects.

Net income fell to 613 million pounds ($101 million) from 813 million pounds in the same period last year, the company said in a statement distributed by the Regulatory News Service. That missed the 786 million-pound average of four analyst estimates compiled by Bloomberg.

Wholesale-service revenue, the biggest contributer to the company’s income, was 1.24 billion pounds. The company didn’t give a comparative figure for last year, saying it declined because of “no new project deliveries during the period in the submarine cable projects business, a revenue stream which has always been uneven.”

Investment in infrastructure declined to 125 million pounds from 205 million a year earlier, leaving the company with 4 billion pounds of cash.

The results were “somewhat resilient” considering the political and economic unrest in Egypt, Shorouk Diab, telecommunications analyst at Cairo-based Pharos Holding, wrote in a research note. They are “largely demonstrating how the company’s fairly diverse business model has served to maintain overall performance in a tough operating environment.”

The shares dropped 1.6 percent, the most in almost a month, to 12.87 pounds at the close in Cairo. The stock has lost 2.6 percent this year compared with a 38 percent increase for the benchmark EGX 30 Index. (EGX30)

To contact the reporter on this story: Shaji Mathew in Dubai at shajimathew@bloomberg.net

To contact the editor responsible for this story: Riad Hamade at rhamade@bloomberg.net