Egypt network switch saps Mobinil Q1 profit

Reuters, Tuesday 1 May 2012

Country's oldest mobile carrier slumps into first quarter net loss as the costs of upgrading the network takes its toll

A man walks past a Mobinil branch in downtown Cairo (Photo: Reuters)

Egyptian mobile firm Mobinil slumped to a first-quarter net loss of LE74 million due to the costs of switching its network to 3G and said its outlook was uncertain because of political volatility.

"The high depreciation and amortisation resulting from the partial swap of the network from 2G to 3G in a continuous effort to modernise the network continues to weigh on the net result," the firm said in a statement on Monday.

Egypt's financial regulator earlier this month approved a tender offer by France Telecom that would cement its control over Mobinil.

France Telecom plans to purchase shares in Mobinil held by its Egyptian venture partner Orascom Telecom Media and Technology (OTMT) for 1.5 billion euros.

Mobinil said revenue in the first quarter of 2012 rose 3.9 percent year-on-year to LE2.5 billion on growth in data and broadband services such as smartphones and internet.

Mobinil said total subscriber numbers of 32.6 million at the end of quarter were up 7.5 percent year-on-year.

But the firm said the outlook for 2012 was uncertain due to Egypt's political instability.

Many firms were hit in the wake of the uprising that toppled

president Hosni Mubarak, prompting an exodus of tourists and investors spooked by lax security and political uncertainty.

Mobinil cited the "difficult and volatile political climate" weighing on the economy and "unstable regulatory environment" but added that it expected to witness growth and improving margins provided the country's politics stabilised.

Voting in a presidential election starts in May.

Mobinil shares inched up 0.3 percent on Monday. The main index rose 0.5 percent.

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