CAIRO: Landline monopoly Telecom Egypt posted a consolidated Q2 net profit of LE 789 million ($142 million) on Thursday, up 16 percent on a year before and in the middle of a range of forecasts. The firm said its net profit margin was 29.5 percent on total consolidated revenue of LE 2.68 billion. Net profit forecasts by five analysts for the three-month period ranged from LE 703 million to LE 853 million. The average forecast was LE 772.7 million. The analysts forecast revenue in a range between LE 2.50 billion and LE 2.53 billion. The firm said it had 9.8 million fixed-line subscribers by end-June, compared with 11.3 million at the end of June 2008. There has been a decline in the customer base, mainly because of the change in our credit policy, newly appointed Chief Executive Officer Tarek Tantawy told Reuters. Telecom Egypt has tightened its consumer credit policy in order to reduce exposure to bad debt, he said. Customers are now disconnected after falling three months behind in payments, compared with 12 months previously. Average revenue per user (ARPU) jumped to LE 59.6 per month in the quarter versus LE 47.8 in the second quarter of 2008. What we see for the future is diversifying revenues in growth areas rather than just relying on growing the fixed line subscribers, said Tantawy, named the new CEO on Wednesday. He replaced Akil Beshir who remains non-executive chairman. Telecom Egypt holds a 45 percent stake in Vodafone s unit Vodafone Egypt. That stake added profit of LE 706 million to the landline firm s bottom line in the second quarter. I see that the results are good on the operational level but the investment income from (Vodafone Egypt) is lower than expected, said Nemat Choucri at HC brokerage. Income from Vodafone Egypt slipped 4 percent on a year earlier, the company statement said. Telecom Egypt said Vodafone Egypt added 1.43 million subscribers in the quarter to total 20.4 million as of end-June. Tantawy said Telecom Egypt had a strong balance sheet and continued to seek acquisitions in the region but that no targets were currently being eyed. The firm is bidding to buy regional operator Orascom Telecom s internet subsidiary LinkDotNet. LinkDotNet would be an interesting asset that we are looking at ... We are looking at acquiring LinkDotNet, he said. Egypt s telecom regulator had approved the bid and was not expected to block any possible future purchase, Tantawy added. Acquiring LinkDotNet would further solidify Telecom Egypt s dominance of the internet market in Egypt, currently 60 percent of market share. On Wednesday, Telecom Egypt named Tarek Tantawy as chief executive officer, immediately replacing chairman Akil Beshir. Beshir will remain as non-executive chairman. Tantawy has been chief financial officer and vice president of the landline monopoly since 2007, helping oversee its partial initial public listing and purchase of a 45 percent stake in Vodafone Egypt's. He tendered his resignation in June and was scheduled to leave on Aug. 13 to pursue other career opportunities but decided to stay on in July. The firm said Tantawy s replacement as CFO and vice-president will be announced in due course.
