CAIRO: Landline monopoly Telecom Egypt's profits dipped more than expected in the third quarter, weighed down by extra promotional spending during the Muslim fasting month of Ramadan and an impairment cost. The mostly state-owned firm's chief executive said he expected broadband subscriber numbers to keep growing by 40-50 percent next year, and the company aimed to launch services of its TE North undersea cable by the end of 2010. Telecom Egypt aims to use data services to help offset lower fixed-line income, which has been hit by a competitive mobile market. Voice revenues fell 23 percent in the first nine months of 2010, while internet and data revenues rose 22 percent. "There is clearly an underlying deterioration in voice, and that's just an industry-wide phenomenon because people are using mobiles more," said Nomura telecoms analyst Martin Mabbutt. The coincidence of Ramadan with the summer holidays may have also dampened demand for fixed-line phone calls in the July-September quarter and pushed the firm to spend more on advertising and promotions, analysts said. The firm's TE North cable between Egypt and France is now finished and the company is trying to start services by the end of the year, Chief Executive Tarek Tantawy told Reuters. Telecom Egypt has said it expects the submarine link to bring in hundreds of millions of dollars in revenues, largely from capacity sales. It should also boost margins by cutting bandwidth costs and allowing the firm to provide faster internet. Ramadan slowdown Telecom Egypt's third-quarter profit was LE 766 million ($133 million), a little below the average forecast of LE 796 million in a Reuters poll of eight analysts. Estimates ranged from LE 614 million to LE 954 million. The firm made a profit of LE 826 million in the third quarter of 2009, and posted an expectation-beating LE 971 million profit in the second quarter of 2010. Sally Gerges, an analyst at investment bank Beltone, said the quarterly decline was "expected given the seasonality impact of Ramadan and the slowdown it usually causes." Analysts also said an unexpectedly large impairment charge trimmed Telecom Egypt's bottom line, but it was not immediately clear which assets the charge applied to. Revenue edged up 1.7 percent in the quarter to LE 2.6 billion, in line with the average analyst forecast. The company said the number of subscribers for its broadband data service rose 43 percent to 819,000, giving it a 62 percent share of the Egyptian market. The number of landline subscribers was flat at 9.4 million. Telecom Egypt's stake in cell phone operator Vodafone's Egyptian unit added over LE 1 billion to its bottom line in the first nine months of 2010, it said.
