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Egypt's Orascom Telecom income drops 85 pct on first quarter

Communications giant's profits tumble to $120.4 million, far below the same period in 2011 when the sell-off of a Tunisian subsidiary boosted income

Reuters , Tuesday 15 May 2012
Orascom Telecom head offices in Cairo (Photo: File)

Orascom Telecom, the Egyptian firm bought last year by Russia's Vimpelcom, said on Monday its first quarter net income fell 85 per cent compared with to a year earlier when profit soared on sale of a stake in its Tunisian business.

Orascom Telecom's net income before minority interest fell to $120.4 million from $821.7 million in the first quarter of 2011, the company said in a statement on Monday.

Orascom Telecom Holding (OTH) sold its entire shareholding in Orascom Tunisia Holding and Carthage Consortium -- through which it owned 50 per cent of Orascom Telecom Tunisia (OTT) -- for a total of $1.2 billion during the first quarter of 2011.

"The [income] decrease is a result of the sale of OTH's entire shareholding in Orascom Tunisia Holding and Carthage Consortium," the firm said in a statement on Monday.

"Taking into consideration the 20 per cent tax on capital gains in Tunisia and its associated investment cost, OTH recognized a gain of $754 million on the transaction last year."

Revenue for the first quarter of 2012 rose 1 per cent to $899 million due to an organic GSM revenue growth of 10 per cent.

Revenue also grew due to significant fluctuations in local currency rates against the dollar in the firm's Algeria, Pakistan and Bangladesh units, as well as liquidation of the firm's handset business "Ring," Orascom said.

Earnings before interest, taxes, depreciation, and amortisation (EBITDA) rose 5 per cent to $433 million.

"[EBITDA growth] is a result of successful OPEX optimisation in most operations," the firm said, adding that cost control measures in its units included tariff optimisation.

First quarter EBITDA margin stood at 48.2 per cent, it said.

Orascom Telecom's subscriber base grew 15.2 per cent to exceed 82 million at the end of the first quarter due in part to loyalty campaigns launched at its Algerian unit Djezzy and reduction of the SIM tax in Bangladesh in June 2011.

Orascom Telecom's shares closed 0.9 per cent lower on Monday before results were issued. The main index closed down 0.4 per cent.

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