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Telecom Egypt Announces Full Year 2009 Consolidated Results
Published Mar 15, 2010
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Telecom Egypt announced its consolidated financial results for the full year ending 31 December 2009. Financial statements have been prepared in accordance with Egyptian Accounting Standards. Commenting on the full year results of 2009, Tarek Tantawy, Chief Executive Officer of Telecom Egypt, said: "2009 was a year in which we made real progress in our long term vision to become a total telecommunications provider.However, in the pursuit of future opportunities we made sure short term performance has not been sacrificed. Year-by-year we have consistently proven our ability to deliver solid profitability and have achieved this again in a turbulent year and in the face of the much discussed telecommunications land-grab. In 2009, this resulted in bottom line growth of 9.4% to arrive at LE3,051m. This translates to a net profit margin of more than 30%.
"There is no doubt that 2009 has been a challenging year. Egypt has not been immune to the global slowdown. Combined with the ambitions of mobile operators in Egypt, this has resulted in aggressive pricing. In our retail business we have responded nimbly to such discounts with compelling promotions of our own. This has placed some pressure on retail revenues in the short term, but has already resulted in a number of subscribers choosing the Telecom Egypt option - one of quality and value.
"Our diversified business model has held us in good stead. Wholesale revenues continue to advance as we benefit from the increase in activity from third party operators, ending the year at LE4,197m.
"The broadband opportunity remains one of the cornerstones of our future. TE Data, our fully owned internet and data arm, I am pleased to report, continues to record remarkable growth - increasing its customer base by 47% in the period under review.
"Vodafone Egypt (VFE) has demonstrated significant success in subscriber acquisitions, adding 32% more subscribers by December 2009. Its customer base now stands at more than 23 million. This means that our investment in Vodafone Egypt continues to show strong growth with attributable income from Vodafone Egypt growing by 8% year-on-year to LE1,407m.
"We continue to demonstrate TE's ability to embrace new opportunities and ensure our business model is sustainable into the future. I strongly believe that we have in place the best possible commercial, operational and financial structures to deliver on our strategy and see maximum value returned."
Financial Review:
- Revenues:
Total consolidated operating revenues for the full year period to 31 December 2009 reached LE9,960m.
Retail services:
Total retail revenues for the full year of 2009 were LE5,764m, a decline of 7% when compared with the same period in 2008; which is primarily attributable to short term promotional activities undertaken by TE during the course of the year necessary to counter continued aggressive promotional activities from mobile operators.
Total access revenues, comprising connections and subscriptions, were LE2,049m for the year ending December 2009; an increase of 2% compared to LE1,999m in 2008.
Total voice revenues were LE2,618m for 2009, a decline of 13% year-on-year, due to discounted promotional activities cited above.
Revenues from internet and data, showed an increase of 13% year-on-year, totaling LE649m, the majority of which can be attributed to TE Data, Telecom Egypt's internet and data subsidiary.
TE Data continued to command its position, adding 201 thousand new subscribers during the full year 2009. This translates to a market share of the retail ADSL market of 61%, compared to 59% at the end of December 2008. At the end of December 2009, TE Data had 625 thousand ADSL subscribers, an increase of 47% in comparison to the same period in 2008.
Wholesale services:
TE derives Wholesale Revenues from domestic and international services to third parties who seek to utilize its extensive, digital infrastructure principally for co-location and transmission services, settlement and infrastructure leasing. Wholesale revenues constitute a growing and important component of Telecom Egypt's revenue mix, accounting for 42% of the Total Service Related Revenues reaching LE4,197m. This represents a 7% rise year-on-year demonstrating the benefits of TE's diversified business model.
In September 2009, TE signed an agreement for the provision of wholesale telecommunications services with Vodafone Egypt (VFE). The agreement comprises two distinct elements: Utilizing TE international gateway services to transit all VFE customers incoming and outgoing international traffic plus relying on TE extensive domestic network for all VFE infrastructure leasing needs. The agreement is expected to represent a total value for TE of approximately LE4bn over the next three years.
- EBITDA/EBIT:
Consolidated EBITDA Before Provisions for the year ending 2009 was LE5,048m, a slight 2% decline year-on-year. However, EBITDA Before Provisions Margin remains at the high end of management expectations at 51%.
EBIT Before FX Gains and Losses for the year reached LE3,524m a slight increase on LE3,512m in 2008.
- Income from Investments:
Total income from Telecom Egypt's investments for the period was LE1,411m, including income from VFE versus LE1,312m for the same period in 2008, an increase of 8%.
TE's investment in VFE (44.95% stake) continues to deliver significant financial benefit. (Note: Vodafone Egypt's financial year is from 1 April to 31 March). Despite intense competition from mobile operators, VFE added the most subscribers in the nine month period ending December 2009. VFE increased its customer base by 32% in comparison to the same period in 2008 to 23 million subscribers. Total voice minutes increased by 25% to more than 28 billion minutes. VFE generated revenues of LE9,109m in the nine month period ending December 31 2009, a 3% increase on the previous period in 2008. Net profit for the period increased to LE2,436m, a rise of 6% year-on-year.
- Net profit:
TE's Consolidated Net Profit for the full year was LE3,051m, a year-on-year increase of 9%. This translates into an EPS of LE1.70, versus LE1.49 for 2008.
- Investments in infrastructure:
Capital expenditure during 2009 showed an increase of 7% in comparison to 2008 as the company's preparations for the launch of its new cable business TE North. For the year ending 31 December 2009, total Capex reached LE980,798m, at the lower end of management guidance.
- Debt:
TE reached a net cash position in 2009, three months ahead of target, through a carefully managed debt repayment programme. As at 31 December 2009, Total Debt stood at LE1,044m while cash and cash equivalents stood at LE2,453m.
Posted by
VMD - [Virtual Marketing Department]
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