Telecom Egypt, the Egyptian incumbent, has announced it would pay a 0.55 Egyptian pound dividend for 2009. It earlier distributed EGP0.75. This announcement puts any immediate mobile plans on hold.
The 80% state-owned firm reported a net profit for 2009…
Telecom Egypt, the Egyptian incumbent, has announced it would pay a 0.55 Egyptian pound dividend for 2009. It earlier distributed EGP0.75. This announcement puts any immediate mobile plans on hold.
The 80% state-owned firm reported a net profit for 2009 of EGP3.1bn (US$545.8m) compared to EGP2.8bn (US$493m) in 2008. The company’s net profit for the first quarter of 2010 rose 3% to EGP992m (US$175m), from EGP961m (US$169) in the same period in 2008.
The company had been in discussions with Vodafone to increase its 45% stake in jointly owned Vodafone Egypt. However, on 1 June the partners agreed to stick with the present ownership structure.
They issued a joint statement that said: “it is in the best interest of Vodafone Egypt that the current ownership structure should remain in place”. The pair added that they remained committed to working together to ensure the operator’s ongoing success.
TE had previously withheld part of its usually hefty shareholder payout in March, telling analysts it was eyeing a move in mobile and would pay again if there was no progress in six months. With the close of the Vodafone Egypt discussions, Telecom Egypt stuck to its word and announced the dividend.
CI Capital issued an analyst report saying that the payout would take EGP940m (US$165.5m) from the firm’s coffers, leaving around EGP1.7bn (US$300m) in cash.
“We think TE’s aspirations to become more active in Egypt’s mobile market may have been put off for now, yet not totally ruled out,” Elalfy said.
Vodafone and Mobinil dominate the Egyptian market, with newer entrant Etisalat Misr trailing. However, the market is a hot potato, with the new kid on the block, a subsidiary of the UAE’s Emirates Telecom, declaring a planned US$1.4bn investment in its Egyptian operation to compete with Mobinil and Vodafone Egypt. At the end of April 2010, the number of Egyptian mobile subscribers stood at 58.7m, 35% higher than the year before.
Telecom Minister Tarek Kamel said in January that Egypt could offer a fourth mobile licence if conditions allow. Experts believe it could be dangerous for Telecom Egypt to ignore mobile, especially since its retail voice revenues are being drained by intense competition in the mobile market. The three existing players have been making swingeing price cuts to court new business, which has encouraged many Egyptian consumers to reduce landline usage, or even discard them completely.
