Telecom Egypt S Regulatory News (TEEG)

13 Mar 2008 07:01

Telecom Egypt S.A.E13 March 2008 Telecom Egypt Announces Full Year 2007 Consolidated Results Cairo, 13 March 2008: Telecom Egypt (TE) (Ticker: ETEL.CA; TEEG.LN), todayannounced its consolidated financial results for the full year ending 31December, 2007. Financial statements have been prepared in accordance withEgyptian Accounting Standards. Highlights for the period include: • Total consolidated revenues reached EGP 10 billion, an increase of 5% in comparison to 2006• EBITDA Before Provisions were EGP 5.4 billion, up 2.1% year-on-year• EBITDA Margin Before Provisions of 54%• Net Profit after Tax was EGP 2.5 billion, an increase of 4.4% in comparison to 2006• Earnings per share (EPS) were EGP 1.39 up 3.8% year-on-year• Ongoing rationalization resulting in twelve months capex related cash-flows of EGP 945 million• Total fixed line subscribers reached 11.23 million, up 4% on 2006• Share of the retail ADSL market is 52%, with 141% subscriber growth• Positive contribution from Vodafone Egypt of EGP 1.1 billion in 2007, compared to EGP 710 million in 2006. Chairman's statement Commenting on the company's results for the full year 2007, Akil Beshir,Chairman and CEO of Telecom Egypt, said: "As a company, we are very proud of our continued profitability, and the abilityto increase profits in a changing market should not be underestimated. OurEBITDA margin remains robust and within management expectations in the low tomid fifties. In 2007, our Net Profit after Tax reached EGP 2.5 billion anincrease of 4.4% compared to 2006, largely driven by the growth we have seen ininternet and data and wholesale revenues. Ensuring profitability is sustainedremains a key priority for TE and we remain committed to keeping a close eye oncosts. "2007 was a year of focused growth in our subscriber base. The fourth quarterwas particularly strong in terms of net additions, resulting from the market'spositive response to our promotional activities. In addition, our Internet anddata services subsidiary - TE Data - now has a market share of 52 percent and anADSL subscriber base of over 220 thousand subscribers. Simultaneously we havebenefited from our stake in Vodafone Egypt, which contributed over one billionEgyptian Pounds to group bottom line throughout 2007. "Meanwhile, our revenue mix has continued to evolve with wholesale revenues nowaccounting for 35% of total sales, while retail revenues account for theremaining 65%. The growth in wholesale revenues was 22% year-on-year with themain driver for this double digit growth is the increase in demand for ourinfrastructure by other operators in the domestic market. We continue to see ourextensive infrastructure as our key asset and we intend to capitalize on it tocapture the growing demand for telecommunication services in the domesticmarket. "An important part of driving future revenues is looking for new opportunitiesand initiatives, such as our submarine cable project, TE North, which is due forcompletion in the second half of 2009. Taking advantage of the boom in Internettraffic from Asia to Europe and vice versa, this submarine cable capitalizes onour existing national infrastructure and will enable Telecom Egypt to generatefurther wholesale revenues by selling capacity to other operators. We havealready signed agreements with three companies, totaling USD 126 million, and weexpect to announce more throughout 2008." Financial Review Revenues Total consolidated operating revenues for the full year ended 31 December 2007rose five percent to reach EGP 10 billion, from EGP 9.5 billion in 2006. Themain driver for growth in the period was the revenues we derive from domesticand international wholesale, which increased 22 percent in total and nowaccounts for 35 percent of our total revenues. Retail services Retail revenues for 2007 were EGP 6.5 billion, a slight decrease in comparisonto EGP 6.6 billion for 2006. Pressure on voice revenues is being more thanoffset by the corresponding increase in wholesale revenues, as other operatorsrequire larger capacity. Meanwhile, take up of Internet and data services from TE's subsidiary - TE Data- demonstrated impressive growth as ADSL subscribers more than doubled duringthe year, representing a 52 percent market share. Internet and data revenuesreached EGP 335 million in 2007, compared to EGP 184 million in 2006. Wholesale services The integrity and reach of TE's fully-modernised telecommunications network isfundamental to our wholesale offering and continued demand from other telecomoperators has again translated to an increase in revenues. Total wholesalerevenues for 2007 were EGP 3.5 billion, compared to EGP 2.8 billion for 2006, anincrease of 22 percent. Domestic wholesale revenues increased by 62.3 percent to EGP 767 million, drivenby two factors. The first, mobile to fixed interconnection, as a result ofincreased traffic. The second, revenue from leasing TE's extensiveinfrastructure to other telecom providers which witnessed a 94 percent increase. Overall, international wholesale grew by 14 percent from EGP 2.4 billion to EGP2.7 billion underpinned by a surge to mobile-to-international traffic requiringincreasing TE's network capacity. EBITDA/EBIT Consolidated EBITDA before provisions for 2007 reached EGP 5.4 billion, a 2.1percent increase on 2006. This resulted in an EBITDA margin before provisions,within management expectations, of 53.9 percent. The one-off impairment forAlgeria affected EBITDA after provisions in 2007. Meanwhile, EBIT for 2007 was 9.7 percent up on the previous year, reaching EGP3.6 billion. Income from Investments Total income from TE's investments for the period was EGP 1.13 billion,including income from Vodafone Egypt which off-set an operating loss of EGP 59million from its investment in Consortium Algerien De Tele-Communications (CAT). Throughout 2007, Vodafone Egypt continued to demonstrate sound operational andfinancial management, increasing revenues by 30 percent to EGP 7.7 billion.Vodafone Egypt doubled net subscriber additions and had 13,333 closing customersas of 31 December 2007. This represents a 53 percent increase in comparison to2006, when the Company had 8,704 closing customers. Net profit Consolidated Net Profit for the period was EGP 2.5 billion, a 4.4 percentincrease compared to 2006. This translates to EPS of EGP 1.39. Investments in infrastructure Over the past few years TE has invested heavily in providing its customers witha fully digitalized, state of the art network, which has significant capacity tocope with the rising demand for wholesale services. As a result, TE reduced itscapex by over 50% in 2007 by spending EGP 945 million. Debt TE's net debt position as of 31 December 2007 was EGP 3.6 billion. Thisrepresents a reduction of EGP 3.2 billion in comparison to 31 December, 2006,when TE's net debt rose to EGP 6.8 billion as a result of the acquisition of anadditional stake in Vodafone Egypt. TE Financial Highlights 12 Months Period Ending December Previous Quarter ComparisonIn EGP 000's Dec. 2007 Dec. 2006 % Change Q4 2007 Q3 2007 % Change(Except Per Share Data)Sales Revenue 9,993,147 9,516,805 5.0% 2,515,403 2,601,286 -3% EBITDA Before Provisions 5,389,135 5,276,536 2.1% 1,249,001 1,392,622 -10.3%Margin 53.9% 55.4% 49.7% 53.5% EBITDA After Provisions 5,223,672 5,333,217 -2.1% 1,346,645 1,406,984 -4%Margin 52.3% 56.0% 53.5% 54.1% EBIT Before FX Gains or Losses 3,674,158 3,388,305 8.4% 1,099,909 998,621 10%Margin 36.8% 35.6% 43.7% 38.4% EBIT 3,580,287 3,264,571 9.7% 1,082,438 942,567 15%EBIT Margin 35.8% 34.3% 43.0% 36.2% Profit Before Taxes & Minority 3,054,345 2,897,825 5.4% 977,551 815,697 20%Interest Consolidated Net Profit 2,534,286 2,426,877 4.4% 831,438 704,372 18%Net Profit Margin 25.4% 25.5% 33.1% 27.1% EPS (EGP) 1.39 1.34 3.8% TE Operational Highlights 12 Months Period Ending December Previous Quarter Comparison Dec. 2007 Dec. 2006 % Change Q4 2007 Q3 2007 % ChangeNumber of Fixed Line Subscribers 11,228,849 10,807,678 4% 11,228,849 11,031,595 2% Fixed Line Subscribers Net Additions 421,171 411,530 2% 197,254 73,347 169% ARPU (EGP/Month) 54.2 58.9 -8.0% 51.0 55.9 -8.7% Capex (EGP 000's) 944,821 1,936,707 -51.2% 286,006 184,251 55.2% Number of ADSL Subscribers 222,166 92,332 141% 222,166 172,767 28.6%Retail ADSL Market Share 52.0% 44.9% 16% 52.0% 48.9% 6% Vodafone Egypt Financial Highlights 9 Months Period Ending Dectember Previous Quarter ComparisonIn EGP mn Dec. 2007 Dec. 2006 % Change Q3 2007 Q2 2007 % Change(Except Per Share Data)Total Revenue 7,737 5,936 30% 2,702 2,607 4% Net Profit 2,082 1,963 6% 736 647 14% Capex 1,736 1,288 35% 439 630 -30% Vodafone Egypt Operational Highlights 9 Months Period Ending Dectember Previous Quarter Comparison Dec. 2007 Dec. 2006 % Change Q3 2007 Q2 2007 % ChangeClosing Customers (000's) 13,333 8,704 53% 13,333 12,186 9% Net Adds (000's) 3,681 2,090 76% 1,147 1,204 -5% Total Voice Minutes (millions) 16,263 10,001 63% 5,878 5,591 5.12% To download a complete copy of Telecom Egypt's FY 2007 consolidated financial results statements and notes to these statements, please click the following link: http://www.rns-pdf.londonstockexchange.com/rns/9962p_-2008-3-12.pdf To download a complete copy of Telecom Egypt's FY 2007 standalone financial results statements and notes to these statements, please click the following link: http://www.rns-pdf.londonstockexchange.com/rns/9962p_1-2008-3-12.pdf - Ends - For further information: Investor Relations Contacts Ahmed FathallahDirector of Investments, Financial Planning& Investor RelationsTelephone: +202 31316699Fax: +202 31316115 Alia A. AlloubaInvestor Relations ManagerTelephone: +202 31315217 Fax: +202 31316116 E-mail: investor.relations@telecomegypt.com.eg Notes to Editors: Within this statement, we may make forward-looking statements regarding futureevents or the future performance of the Company. By their very nature,forward-looking statements involve inherent risks and uncertainties, bothgeneral and specific, and risks exist that the predictions, forecasts,projections and other forward-looking statements will not be achieved. Youshould be aware that a number of important factors could cause actual results todiffer materially from the plans, objectives, expectations, estimates andintentions expressed in such forward-looking statements. When relying onforward-looking statements, you should carefully consider the political,economic, social and legal environment in which Telecom Egypt operates. Suchforward-looking statements speak only as of the time of this release today.Accordingly, Telecom Egypt does not undertake any obligation to update or reviseany of them, whether as a result of new information, future events or otherwiseother than as required by applicable laws, the Listing Rules or Prospectus Rulesof the United Kingdom Listing Authority, the Egyptian Capital Markets Authorityor the Cairo and Alexandria Stock Exchange. The documents filed from time totime with these authorities may identify important factors that could causeactual results to differ materially from those contained in any forward-lookingstatements. About Telecom Egypt Telecom Egypt (TE), Egypt's incumbent telecommunications operator, started itsoperations in 1854 with the first telegraph line in Egypt. Then it wascorporatized in 1998 to replace the former Arab Republic of Egypt NationalTelecommunication Organization (ARENTO). The Company is the largest provider offixed-line services in the Middle East and Africa with 11.23 million subscribersas at the end of December 2007. TE provides retail telecommunication services including access, local, longdistance and international voice, Internet and data, and other services. Thecompany also provides wholesale services including bandwidth capacity leasing toISPs, and national and international interconnection services. Telecom Egypt'sservices also include the provision of narrowband and broadband internet accessthrough its subsidiary TE Data. TE Data has active operations in Egypt andJordan. TE currently participates in the mobile segment in Egypt by providing mobileinterconnectivity through its current, increased 44.79% holding in VodafoneEgypt, one of the three existing Egyptian mobile operators. TE's shares and GDRs (Ticker: ETEL.CA; TEEG.LN) are traded on the Cairo andAlexandria Stock Exchanges and the London Stock Exchange. This information is provided by RNS The company news service from the London Stock Exchange