Telecom Egypt Q1 profit seen sharply down

Landline monopoly Telecom Egypt is seen posting profit sharply lower than a year ago, with a relentless slide in retail revenue expected to have shrunk margins as the company competed with Egypt's three mobile operators.

Eight analysts polled by Reuters saw net profit at 668m Egyptian pounds ($119m) on revenue of 2.3bn pounds.

The company made 481m pounds on 2.2bn pounds revenue in the fourth quarter, according to Reuters calculations. Telecom Egypt does not break out quarterly figures from its annual results.

In first quarter 2009, it made 961m pounds on revenue of 2.5bn pounds. Full-year results released in March showed a disappointing fourth quarter profit, a reduced dividend and a delay on the launch of an undersea cable.

It warned at the time that 2010 revenue would be flat to 2 per cent lower, with an EBITDA margin in the "mid 40s."

The firm, which gains an increasing portion of its profit from its 45 per cent stake in Vodafone's Egyptian unit, told analysts the withheld dividend could be used to bid for a possible fourth mobile licence or be issued later in the year.

The firm tightened its credit policy last year, cutting two million lines, and is not seen growing that number back quickly despite offers of discounted or free installation of lines.

Telecom Egypt had 9.5 million fixed-line subscribers at end-December, compared to 11. 5 million at end-March 2009.

The government retains an 80 percent stake in Telecom Egypt, while the rest is freely traded.