Egypt's Mobinil sees $29m quarterly loss, subscribers up despite boycott

Ahram Online, Tuesday 21 Feb 2012

Mobile operator's profits are hit by new accounting practices and increased promotional spending despite gaining 1.3 million new subscribers

Mobinil
Mobinil profits are even lower than expected, say analysts (Photo: Reuters)

Egyptian mobile operator Mobinil posted net losses of LE177 million ($29.32 million) for the fourth quarter of 2011, hit by spiralling operating costs. A proposed boycott against the firm, however, seemed to have limited effect.

Mobinil saw net income of LE342 million in the same quarter of 2010, the firm said in a statement.
 
"The results clearly illustrate the extent of the challenges the business was facing in a turbulent political, social and economic environment," Yves Gauthier, the company's chief executive told Reuters.
 
Mobinil said revenue for the final quarter of 2011 was LE2.54 billion, and that its earnings before interest, taxes, depreciation and amortisation (EBITDA) were LE598 million.
 
Political turmoil following the overthrow of Mubarak stalled business activity in Egypt, taking a heavy toll on the revenues of most major firms.
 
But Cairo-based investment bank Beltone Financial suggested other factors may have been behind Mobinil's losses.
 
A new accounting method for employees' bonuses, which were previously funded from profits shares, and rising Selling, General and Adminstrative Expenses (SG&A) hit profits, Beltone said in a note.
 
It also suggested Mobinil has upped its marketing spend in order to protect its subscriber base.
 
This was especially important after June, when the firm -- one of Egypt's three mobile service providers -- became embroiled in controversy following a social media gaffe by its founder.
 
Telecoms tycoon Naguib Sawiris tweeted a cartoon of Mickey Mouse with a long beard and Minnie Mouse veiled in black. Some Egyptians considered the cartoon offensive to Islam and called for a boycott of Mobinil.
 
Figures, however, suggest the campaign either failed to find support or was countered by the firm's increasing spending on promotions.
 
Mobinil's total subscribers climbed between September and December, up 1.338 million to 32.914 million by the end of 2011.
 
Last week, France Telecom said it had reached a preliminary accord to buy out Orascom Telecom Media Technology's stake in Mobinil.
 
The deal will reportedly see the French group pay out about 1.5 billion euros, according to Reuters calculations.
 
Shares in Mobinil closed down 1.88 per cent on Tuesday. Egypt's EGX30 main index fell 2.37 per cent.
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