Telecom Egypt to spend more this year, mainly on fiber network

Chief Executive Mohamed Elnawawy said the company planned capital expenditure of 3.428 billion Egyptian pounds

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Telecom Egypt plans to spend more than $400 million this year mainly on building a fiber network in the country after the fixed-line monopoly reported a 31 percent fall in 2014 profits.

Chief Executive Mohamed Elnawawy said the company planned capital expenditure of 3.428 billion Egyptian pounds ($449.28 million) in 2015, which he said was a record high for capex.

Net profit for the year fell to 2.03 billion Egyptian pounds ($266 million) from 2.96 billion pounds in 2013, Telecom Egypt said, citing several one-off and operational costs related to license fee payments and tax liabilities.

Telecom Egypt’s landline market has come under pressure as more Egyptians use services provided by the country’s three mobile phone companies, Vodafone Egypt, Etisalat and Mobinil.

Last year, Egypt opened the way for Telecom Egypt to offer mobile services, while the government also took steps to allow the three mobile companies to enter the landline market.

Telecom Egypt agreed last year to pay 2.5 billion pounds for a unified license for mobile and landlines which would allow it to compete with the mobile operators.

But activation of the license, approved by the government last year, has been repeatedly delayed.

Elnawawy said Telecom Egypt was eager to acquire the new license: “We know mobile is the only way forward.”

The government has said for competition reasons Telecom Egypt would need to shed its 45 percent stake in Vodafone Egypt once it has the new unified license.

But the company has not done this yet and has said it might consider alternative options such as taking a controlling stake in Vodafone Egypt, majority-owned by British mobile company Vodafone.

Elnawawy said his company was in the final stages of selecting an investment bank to consult it on what to do with its minority holdings, including Vodafone Egypt.

Telecom Egypt said license fees hit its 2014 results to the tune of 201 million pounds, deferred tax liabilities rose by 308 million Egyptian pounds and its salary bill went up by 280 million pounds.

The company, in which the government owns an 80 percent stake, had operating revenues of 12.16 billion Egyptian pounds in 2014, up from 11.14 billion the previous year.

Elnawawy said the company would pay dividends of 0.56 Egyptian pounds ($0.07) per share, including interim dividends of 0.36 pounds paid in September. The decision requires approval from the general assembly.

($1 = 7.6300 Egyptian pounds)

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