Telecom Egypt expects 1m users within first year of mobile services launch

Ahram Online, Tuesday 13 May 2014

Telecom Egypt awaits fast growth, but analysts predict a limited market share for the company, whose Q1 profits have dropped y-o-y

Telecom Egypt
Telecom Egypt (Photo: Al-Ahram)

Egypt's monopoly fixed-line operator Telecom Egypt (TE) expects 1 million subscribers for its mobile services within the first year of their launch, expected later this year, CEO Mohamed El-Nawawy said in a press conference on Tuesday.

Earlier this month, TE agreed to pay LE2.5 billion to Egypt's telecom regulator for a license which will allow it to offer mobile services to its customers through the infrastructure of the country's mobile operators.

"This sounds like a plausible scenario," Omar Maher, telecom analyst at Cairo-based EFG-Hermes, said about TE's hopes for 1 million subscribers. "But in the long run, I don’t see them getting more than 10-15 percent of the market share, at best."

Total mobile subscriptions in the 86 million strong Arab nation reached 97.47 million in September 2013, bringing the mobile phone penetration rate to 113 percent.

The company also reported a first quarter net profit after taxes of LE549 million on Tuesday, down 36 percent from the previous year's first quarter figure of LE858 million.

"The profit dropping is mostly on the back of the significant decline in contribution from the Vodafone investment," says Maher.

TE holds a 45 percent stake in Vodafone Egypt, one of the country’s three existing mobile phone service providers.

Vodafone’s contribution to TE last quarter was LE154 million, 32 percent lower than in Q1 2013, when it contributed LE227 million.

Revenues for the period also declined year-on-year to LE2.564 billion, down 5.6 percent from last year's LE2.717 billion, while costs rose due to an annual salary increase, added Maher.

Being 80 percent state-owned, TE is obliged to provide an annual salary increase (around 8 percent) to its 46,000 strong workforce, in line with the rest of the public sector.

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