Egypt's Orascom Telecom 4th quarter net loss narrows to $83 million

Problems in the company's Algerian operations and foreign exchange losses causes firm to miss profit forecasts, figures show

Orascom Telecom Holding (OT), the Egyptian company bought last year by Russia's Vimpelcom Ltd, said on Monday it narrowed its 4Q2011 losses to $83 million, an improvement on the year before when it was hit by impairment charges.
Orascom was expected to report net income of $70 million, according to the average analyst forecast in a Reuters poll.
Problems in the company's Algerian operations and foreign exchange losses were the main reasons for the losses, analysts said.
The company reported a decline in average revenue per user (ARPU) in its Algerian unit, Djezzy - its most profitable business - and continued negative effects after the Bank of Algeria instructed banks not to process any overseas foreign currency transfers by Orascom Telecom Algeria (OTA).
"[This] is having devastating effects on OTA's network and reputation," the company said in a statement. "It is preventing the importation of goods which are necessary for maintenance purposes and for network capacity expansion."
Net income in the quarter was also impacted by an increase in unrealised foreign exchange losses in OT's Bangladesh business and in OT Holding, driven by currency devaluations versus the U.S. dollar in relation to certain loans and payables in foreign currencies.
Revenues for the quarter, down 2 per cent year-on-year to $896 million, were also hit by the depreciation of local currencies in its main operating markets, including Algeria and Pakistan, which impacted the company's U.S. dollar revenues.
The steady fall in value for the Egyptian pound throughout 2011 -- it now sits at around LE6.03 to the dollar -- also spurred the losses.
The company also took a one-off loss of $66 million as it took steps to increase its corporate contingent liability provisions, according to a statement from Cairo-based investment bank Beltone Financial.
OT posted a loss of $170 million in the fourth quarter of 2010, hit by an impairment in its assets in Namibia.
OT's subscriber base exceeded 78 million at the end of December 2011, a rise of 13 per cent over the same period last year, after the exclusion of its Alfa, Mobinil and Koryolink subscribers for comparative purposes, it said.
Earnings before interest, tax, depreciation and amortisation (EBITDA) were $346 million, down 4 per cent from the same period a year earlier, due to an "increase in corporate contingent liability provisions at the OT Holding level, in addition to unfavourable currency movements," it said.
OT closed 3.9 per cent down on Monday. The main index closed 1.5 per cent down.