Telecom Egypt sees businesses investing again

By Tom Pfeiffer

CAIRO (Reuters) - Landline monopoly Telecom Egypt expects to maintain its profitability this year as it presses ahead with cost cuts and business clients look again at investing after a turbulent 2011, company executives said on Thursday.

Telecom Egypt reported fourth-quarter net profit of 584 million Egyptian pounds, up 0.5 percent from a year earlier according to Reuters calculations.

Revenues, hit by slower business activity, weaker household incomes and depressed tourism, were down 3.2 percent in the full year at 9.9 billion pounds.

But annual earnings before interest, tax, depreciation and amortisation (EBITDA) were 46 percent of sales, more than expected by analysts such as Mohamed Helmy at CIBC brokerage.

"We are positive overall on these results," he said, rating Telecom Egypt a "buy". "The EBITDA margin was almost flat despite higher salaries and call connection costs... Their cost optimisation programme has been very successful."

The company's shares were up 2.2 percent at 1045 GMT.

Telecom Egypt's main fixed-line retail business has been slowing and the company is trying to keep profits growing by focusing on new broadband and wholesale services, getting more income from existing customers and a venture with Vodafone, which is Egypt's biggest mobile operator.

It lowered non-payroll operating expenditure by 148 million pounds in 2011 and expects similar reductions this year and next.