CAIRO: Egypt s Mobinil will see slowing subscriber growth in the fourth quarter, with average revenue per user (ARPU) declining for the foreseeable future, the firm s chief financial officer said on Tuesday. Mobinil, which claims the largest share of Egypt s competitive mobile market, had 24.6 million subscribers by end-September after adding at least 1 million in each of the first three quarters this year. We are talking about ending the year a little bit over the 25 million subscriber mark, Khalid Ellaicy told a conference call a day after the firm posted an 8 percent decline in third quarter profit, towards the lower end of expectations. Promotions offered over the summer period and during the Muslim holy month of Ramadan hit the firm s third quarter numbers. Pricing has returned to pre-Ramadan levels, but Ellaicy said average customer spending would likely keep falling. ARPUs will continue to decline for the foreseeable future, he said, saying higher-value post-paid subscriber numbers were static while lower-end pre-paid additions were growing. He said increases in traffic and revenue were more relevant indicators of the firm s future prospects, and that a growing data segment and other value-added services would aid ARPUs. He said that while subscriber growth would eventually flatten, economic growth would rejuvenate spending by subscribers. I don t think we will see that in the next year to come because we are still anticipating the penetration curve to go above 80 percent, he said. Mobile penetration in Egypt is roughly 66 percent, with 51.5 million accounts in a population of some 77 million. The country s largest mobile operator by subscribers reported a profit of LE 497 million ($90.8 million) in the third quarter, the low end of expectations from six analysts. The Egyptian market witnessed very aggressive competitive price moves during the third quarter, Mobinil s Chairman Alex Shalaby said in the earnings statement. We had forecast that the quarter would be a bit weaker than the second quarter because of the Ramadan effect, which caused lower usage and higher costs, said EFG-Hermes telecom analyst Nadine Ghobrial. There were a lot of promotions that we believe have put pressure on the effective tariff levels, she added. All three mobile operators offered cut-price rates for calls during the Muslim holy month of Ramadan, which last year fell in the fourth quarter, including rate reductions for Egyptian pilgrims traveling to Saudi Arabia. Mobinil teamed up with the Zain network in Saudi to offer a roaming rate of LE 0.50 per minute to receive calls from Egypt during the month. The firm also offered a day-time rate of LE 0.05 starting from the third minute within Egypt. They made strong additions for subscribers as expected due to seasonality and the Ramadan period but this was at the price of ARPUs, because they wanted to make aggressive promotions like the other operators, said Ahmed Adel, telecom analyst at Naeem. Mobinil s earnings before interest, taxation, depreciation and amortization (EBITDA) was LE 1.268 billion, and the EBITDA margin was in line with expectations at 45.4 percent.
