Telecom Egypt has announced its Q3 2019 results which are based on the consolidated financials prepared in accordance with Egyptian Accounting Standards.
Consolidated revenue landed at EGP 19bn with a 10% YoY increase. Normalizing for the Bharti deal recognized in Q3 2018, the underlying top line grew by 21% YoY on a 35% YoY growth in data revenue, followed by growth in submarine cable projects and infrastructure services.
Customer base grew across the board; with fixed voice customers growing 11% YoY, fixed broadband increasing 15% YoY and mobile reporting a 27% growth.
The early retirement program (ERP) was extended to a total of 3,000 employees with a total cost of EGP 1.5bn.
Adjusted EBITDA for the Bharti deal and the ERP grew 6% YoY thanks to underlying revenue growth. Normalized EBITDA margin stood at 27% within our full year guidance.
Net profit declined 8% YoY to reach EGP 3.2bn weighed down by the ERP costs and the base effect of the Bharti deal in 2018. Normalizing for such impacts, net profit would have reached EGP 4.4bn, increasing 39% YoY supported by FX gains, higher investment income from Vodafone and enhanced operational performance.
In-service Capex to sales reached 33% as a result of the Capex acceleration program entailing the copper-to-fibre replacement across the country by mid-2020 instead of 2022.
Net debt amounted to 13.7bn, representing 2.0x of annualized EBITDA (excl. ERP) compared to 2.1x in FY 2018.
Adel Hamed, Group Chief Executive, commented,“Since the beginning of the year, Telecom Egypt has invested heavily in its infrastructure in order to avail enhanced telecom services to all its customers. We pride ourselves on the execution of such an ambitious project that halved the time of implementation of a four-year project. The results we announce today are a signal that we are moving in the right direction with revenue continuing to grow at a double digit and filtering through to EBITDA, especially in light of the absence of any one-off or project based revenue in the quarter. That said, such investment led to a jump in depreciation and financing expenses that has pressured the bottom-line in spite of strong operational performance, yet we have created a large opportunity and exceptional positioning for us to monetize such investment for years to come.
He added, “The demand for data is very strong in Egypt across all segments – home, enterprise and domestic operators – and we intend to leverage our positioning to capture a larger share of that growing demand.
On the cost side, we extended the early retirement program (ERP) that was reactivated in Q2 2019 for an additional 1000 employees. This extension will be financed using the extraordinary dividends we received from Vodafone Egypt in Q3 2019 and is expected to have a payback period of 2.5 years.”
