Egypt Mobinil sees 96 per cent annual drop in Q3 profits

Reuters, Tuesday 25 Oct 2011

Mobile operator takes a hit as revenues drop in the wake of cartoon controversy, and a new tax regime takes a further bite

Egypt's Mobinil posted a 96 per cent fall in year-on-year third quarter net profit to LE10 million (US$1.6 million) on Tuesday, but reversed a loss from the previous quarter.

The result compares to a net loss of LE108.5 million in the second quarter as political turmoil following the toppling of President Hosni Mubarak froze business activity in the country. The second quarter was also hit by deferred taxes, the firm said.

"The impact of the new tax regime is limited to current period profits as the hit related to deferred taxes was registered during the second quarter of 2011," Mobinil said in a statement, without adding further details.

Mobinil said in its statement that its total subscribers in the quarter increased 3.4 per cent quarter-on-quarter to a total of 31.576 million subscribers.

The firm's second-quarter earnings had been affected by a drop in subscribers who took offence at a cartoon tweeted by the firm's founder in June. Some people considered the cartoon to be offensive to Islam, prompting some Muslims to call for a boycott of Mobinil.

Mobinil's chairman had told Reuters earlier this month that the customer boycott had subsided.

Mobinil said in its statement its subscriber base had grown "despite the Twitter incident." The firm said it had offered commercial promotions to its customers, including new products, discounts and free modems.

Mobinil's broadband base of customers rose 1.3 per cent quarter-on-quarter to 241,000 customers.

The firm's revenues for the third quarter decreased 5 per cent year-on-year to LE2.6 billion, the firm said. Earnings before interest, taxes, depreciation and amortisation (EBITDA) fell 20 per cent to LE862 million compared to the same period a year earlier.

Short link: