Telecom Egypt S Regulatory News (TEEG)

15 Aug 2007 07:00

Telecom Egypt S.A.E15 August 2007 Telecom Egypt Announces HY 2007 Consolidated Results Cairo, 15 August, 2007: Telecom Egypt (TE) (Ticker: ETEL.CA; TEEG.LN), todayannounced its consolidated financial results for the six months ending 30 June,2007. Financial statements have been prepared in accordance with EgyptianAccounting Standards. First-half 2007 highlights include: • Total revenues reached EGP 4.9 billion, an increase of 9% on HY 2006 • EBITDA before provisions reached EGP 2.7 billion, up 10% from EGP 2.5 billion at HY 2006 • EBITDA margin before provisions for the period was 56.3% • EBITDA after provisions reached EGP 2.5 billion, up 1% from EGP 2.4 billion at HY 2006 • Net Profit after Tax decreased 4% on HY 2006 to EGP 998 million mainly as a result of a non-recurring and non-cash impairment loss on assets. • Earnings per share (EPS) decreased 4% on HY 2006 to EGP 0.58 • Capex related cash flows reduced by 36% year-on-year to EGP 475 million • 10.96 million fixed-line subscribers, up 3% on HY 2006 • Monthly ARPU stable at EGP 55.3 for six months ended June 2007 • 183% growth in ADSL subscribers versus HY 2006 with a 47.7% retail ADSL market share Chairman's statement Commenting on Telecom Egypt's first-half 2007 results, Akil Beshir, Chairman andCEO of Telecom Egypt, said: "Both operationally and financially, these results represent a strong start to2007 and are a reflection of the success we have achieved in evolving ourbusiness in line with the changing nature of the Egyptian telecommunicationsmarket. "As the sole network provider in Egypt, we have been focused on expanding oursuccessful wholesale offering which delivered revenues of EGP 1.6 billion forthe first six months of this year representing a remarkable growth of 32%year-on-year and 22% growth on the previous quarter. Our fully digitalised andextensive backbone has been key to this effort and has enabled us to servicegrowing demand from other operators to carry traffic over our network. "On the retail revenue front, the net effect of our tariff rebalancing programmehas continued to deliver strong growth in access revenues, particularly fromsubscription revenues which increased 11 percent year-on-year to reach EGP 851million, while total retail revenues reached EGP 3.2 billion for the six monthperiod. "Total revenue reached EGP 4.9 billion representing a growth of 9% year-on-yearwhile maintaining a very healthy EBITDA margin before provisions of 56.3percent. "Our retail Internet business, TE Data, continues to deliver a very solidperformance, having achieved 48 percent market share by the end of the firsthalf of 2007 versus 38% in June 2006. Our ADSL subscriber base has alreadygrown 21.5 percent relative to the previous quarter and almost trebled in sizeyear-on-year. "Our strategic investment in Vodafone Egypt (VE) continues to deliver a strongfinancial result for our business, contributing investment income of EGP 507million during the six months period ending June 2007. "In comparison with 2006, reported net profit has been negatively impacted bythe non recurring impairment loss on assets during the period under review,however, when one examines the underlying financial performance more closely,stripping out such impairment charge, this in fact masks a very positiveunderlying trend." Financial Review Revenues Total consolidated operating revenues rose 9 percent year-on-year to EGP 4.9billion in the six months to 30 June 2007. Solid growth in revenues isunderpinned by strong demand for TE's wholesale services, from other operators. Retail services The net effect of TE's tariff rebalancing initiative continued to boostsubscription revenues from retail services in the first-half 2007which rose 11percent to EGP 851 million during the six months to 30 June, 2007, compared withEGP 764 million in 2006. Internet & Data TE Data, TE's 95 percent owned Internet and Data services subsidiary, maintaineda strong performance in the second quarter of 2007. Revenues from retailInternet and Data services continued to grow aggressively reaching EGP 131million for the first half of 2007; 60 percent above the same period last year.ADSL subscribers grew by 21.5 percent relative to the first quarter of 2007 to134,873 taking TE Data's share of Egypt's retail ADSL market to 48 percent. Wholesale services Strong demand from other telecom operators dependent on TE's substantialinfrastructure has seen revenue from wholesale services rise 32 percentyear-on-year to EGP 1.6 billion in the six months ended June, 2007. Thecontribution of TE's wholesale services to total operating revenues increased to34 percent over the six month period, compared to 28 percent in 2006, mainlydriven by demand from other operators. Rising mobile subscriber levels, combinedwith the entry of a third mobile operator and the launch of 3G services has hada marked impact on the revenues TE generates from leasing its infrastructure,with this being one of TE's fastest growing revenue lines. EBITDA/EBIT TE's operational performance remains strong with EBITDA before provisions forthe half year period increasing 10 percent year-on-year to EGP 2.7 billion,compared with EGP 2.5 billion in 2006. EBITDA before provisions margin was 56.3percent, continually one of the industry's highest. A one-off impairment of EGP 258 million was charged during the three monthperiod to 30 June, 2007, incurred against its joint venture fixed-line operationin Algeria, Consortium Algerien De Tele-Communications (CAT). The impact of the charge took TE's consolidated EBITDA after provisions for thesix month period ending 30 June, 2007 to EGP 2.5 billion. EBIT increased 9 percent on the previous year, reaching EGP 1.6 billion for thesix month period. Income from Investments Total income from investments for the six month period ended 30 June, 2007reached EGP 465 million, of which EGP 507 million from Vodafone Egypt (VE) inwhich TE owns a 44.79% stake, in addition to EGP 42.6 million share of loss fromCAT, TE's Algerian operation. Net profit Consolidated net profit was impacted during the second quarter by the EGP 258million extraordinary impairment incurred against TE's Algerian operation.Consequently, net profit dropped 4 percent to EGP 998 million for the six monthsto 30 June, 2007. Investments in infrastructure To date TE has invested heavily in providing its customers with a fullydigitalized, state of the art network, with excess capacity to handle risingdemand for wholesale services. This position has enabled the Company to scaleback its capex programme in 2007, resulting in capex related cash flowsdecreasing year-on-year by 36 percent to EGP 475 million for HY 2007, comparedto EGP 738 million at HY 2006. Debt TE's net debt position at year-end 2006 rose to EGP 6.8 billion as a result ofthe acquisition of an additional 19 percent stake in Vodafone Egypt. During thefirst six months to June 2007, TE has reduced this position by EGP 1 billion toEGP 5.9 billion as at 30 June, 2007. Operational Highlights 6 Months Period Ending June Previous Quarter Comparison June June % Change Q2 Q1 % Change 2007 2006 2007 2007 Number of Fixed Line Subscribers 10,958,248 10,628,349 3% 10,958,248 10,897,815 1% Fixed Line Subscribers Net Additions 150,570 232,201 -35% 60,433 90,137 -33% ARPU (EGP/Month) 55.3 55.8 -0.8% 55.2 55.4 -0.3% Number of ADSL Subscribers 134,873 47,740 183% 134,873 111,030 21.5%Retail ADSL Market Share 47.7% 38.5% 24% 47.7% 46.5% 3% Financial Highlights 6 Months Period Ending June Previous Quarter ComparisonIn EGP 000's (Except Per Share Data) June 2007 June 2006 % Change Q2 2007 Q1 2007 % Change Sales Revenue 4,876,458 4,478,529 9% 2,498,699 2,377,758 5% EBITDA Before Provisions 2,747,512 2,493,721 10% 1,376,597 1,370,915 0.4%Margin 56.3% 55.7% 55.1% 57.7% EBITDA After Provisions 2,470,043 2,444,494 1% 1,118,281 1,351,762 -17%Margin 50.7% 54.6% 44.8% 56.9% EBIT Before FX Gains or Losses 1,575,628 1,513,107 4% 701,517 874,111 -20%Margin 32.3% 33.8% 28.1% 36.8% EBIT 1,555,282 1,430,884 9% 695,023 860,259 -19%EBIT Margin 31.9% 31.9% 27.8% 36.2% Profit Before Taxes & Minority 1,261,097 1,307,543 -4% 551,136 709,961 -22%Interest Consolidated Net Profit 998,476 1,044,907 -4% 413,247 585,229 -29%Net Profit Margin 20.5% 23.3% 16.5% 24.6% EPS (EGP) 0.58 0.61 -4% To download a complete copy of Telecom Egypt's 2Q 2007 consolidated financialresults statements and notes to these statements, please click the followinglink: http://www.rns-pdf.londonstockexchange.com/rns/0957c_-2007-8-14.pdf To download a complete copy of Telecom Egypt's 2Q 2007 standalone financialresults statements and notes to these statements, please click the followinglink: http://www.rns-pdf.londonstockexchange.com/rns/0957c_2-2007-8-14.pdf - Ends - For further information: Investor Relations Contacts Alia AlloubaAssistant Manager Investor RelationsTelephone: +202 25788787Fax: +202 25789314 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 10.96 million subscribersas at the end of June 2007 representing a teledensity of 15.1%. 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