Telecom Egypt published its Q2 2018 results driven by its strong operational performance. Consolidated revenue crossed EGP 10bn for the first time increasing 16% year-on-year as data services that increased by 45% year-on-year, continue to lead growth boosted by fixed broadband.
Mobile revenue already contributed a high single digit to retail revenue demonstrating management effort to monetize the successful customer acquisition witnessed since launch.
Customer base expansion across the board with fixed voice customers grew 11% which reflects a clear continuing reversal of trend supported by the continuation of fixed broadband customer growth of 27%. Additionally, mobile net additions reached 1mn year-to-date.
EBITDA came in at EGP 3.3bn growing 19% year-on-year recording a margin of 32.5%, stable year-on-year thanks to strong cost control including employee and call cost management.
Operating profit grew 11% despite the high level of Capex reflected on the increased depreciation (+23%) and cost of the license represented in the hike in amortization
Net Profit declined 18% to EGP 2.1bn on a decline in investment income from Vodafone Egypt and the impact of higher financing expenses. H1 2018 net profit was weighed on by Q1 performance as Q2 net profit increased 4% and 66% QoQ thanks to operational growth offsetting the increase in D&A and finance expenses. CAPEX amounted to EGP 1.7bn representing 17% of sales.
Ahmed El Beheiry, Group Chief Executive, commented, "We are extremely proud of this quarter’s operational performance. Telecom Egypt has been able to maintain its net profit year-on-year with a slight increase in Q2 2018 thanks to the management team’s effort to strictly follow the long-term strategy put before the BoD at the beginning of the year and to overcome through operational efficiency the challenges of higher costs of marketing new products, the impact of Capex spending on depreciation and the higher borrowing costs."
"I am extremely pleased with the operating profit growth we achieved this quarter of 26% year-on-year, which has helped us to offset all the base effect on the bottom line of being in a new investment phase," he added.
Telecom Egypt CEO lauded the company’s financial results and emphasized the importance of the operator’s strategy in driving its growth thanks to its three main pillars.
"It is important to highlight that our strategy relies on targeted investments in order to fulfil our goals for the company and the country. Our main focus lies on three objectives: (1) successfully integrating and monetizing the newly established mobile business to boost growth, (2) overhauling Egypt’s internet infrastructure to provide the best service quality and induce revenue plus economic growth, and (3) expanding Egypt’s international network with the aim of enabling our vision of Egypt as a digital hub. Our ambitious investment strategy, while long-term in nature, has already shown results in H1 2018 with operational profit growing by 11% year-on-year in such a critical phase of the company’s history. We are extremely proud of such performance noting that the impact on net profit in H1 2018 is an expected by-product of such investment strategy and the high interest macro environment."
In addition, El Beheiry shed light on achievements made in the past few months that were a direct reflection of Telecom Egypt’s efforts to fulfil the aforementioned strategy. "On the retail side: two critical product launches were introduced to the market; our mobile postpaid product "Indigo" and our fixed broadband revamp to "WE Internet". Both products target to increase our share of wallet of the customer’s spending, while at the same time offer our customers a completely new top-notch experience. On the wholesale front, several agreements were signed to secure our existing revenue streams, but also to improve our positioning in the mobile market. On the latter, we are very pleased to have been able to revise our national roaming agreement with Etisalat in our favor as well as to achieve asymmetric mobile termination rates through commercial agreements with Etisalat and Orange."