CAIRO: Telecom Egypt has proposed a reduced dividend and delayed the launch of an undersea cable until the second quarter, its chief executive said on Monday, after posting lower-than-expected earnings. The TE North cable, which travels from Egypt s Mediterranean coast to Marseille in France, was due to be completed by the end of 2009. There has been some real progress towards completion. The cable should be up and running sometime in the second quarter of this year, Tarek Tantawy said in a phone interview, without giving a reason for the delay. He said the landline monopoly, in which the government retains an 80 percent stake, would pay a dividend of LE 0.75 ($0.14) per share pending shareholder approval at a meeting on March 31. It paid a LE 1.30 dividend in 2008, according to Reuters data. It was a disappointing fourth quarter, said Nemat Choucri, a telecom analyst at HC Securities. The net income is significantly lower than our and consensus estimates, she said. The full-year figures provided equate to a fourth-quarter net profit of LE 481 million on revenue of LE 2.2 billion, according to Reuters calculations. A Reuters poll of nine analysts predicted quarterly profit at an average of LE 732 million on revenue of LE 2.5 billion. Shares in the firm fell 4.9 percent in the opening forty-five minutes of trade, while the main index was down 3.2 percent. Choucri said the lower revenue figure could be partially explained by the delay on opening TE North. She added that the firm s 45 percent stake in Vodafone Egypt contributed more to the bottom line on a year-on-year basis. Analysts at CI Capital wrote in a note that the results disappointed due to lower revenues, tighter margins, lower net interest income and an impairment charge of LE 125 million in the fourth quarter linked to a dispute with mobile operators. Tantawy said most growth in 2010 would come from the firm s wholesale and internet operations, with fixed-line growth muted. I do not see the customer base going back to 11 million in 2009 ... I expect some additions because of new households but nowhere near the 1.5 or 2 million (lost in 2009), he said. The firm said it had a total of 9.55 million fixed-line subscribers at the end of December, compared to 9.63 million at the end of September. It cut off some 2 million lines earlier in the year to reduce debt exposure. The firm s internet arm TE Data added 201,000 subscribers in 2009 for a total of 625,000, giving it a market share of 61 percent. Revenues from internet and data showed an increase of 13 percent to LE 649 million, the majority of which can be attributed to TE Data. The operator claims a 61 percent share of the retail ADSL market, up from 59 percent at the end of 2008.
