Telecom Egypt (TE)’s We has revealed its financial results for the first half (H1) of this year and the second quarter (Q2) of 2018, which showed revenues exceeding EGP 10bn, up by 16% year-over-year, driven by the continuous increase in Internet services revenues, which reached 45%, especially, ADSL.
Customer base expansion across the board with fixed voice customers growing 11%, a clear reversal of trend continues supported by the continuation of fixed broadband customer growth of 27%. Additionally, mobile net subscribers reached 1 million, since the beginning of this yearr, accumulating the total number of mobile subscribers to 3.3 million.
Net profit declined 18% to EGP 2.1bn in investment income from Vodafone Egypt and the impact of higher financing expenses. The profits of H1 of 2018 was weighed on by Q1 performance, as Q2 net profit increased 4% y-o-y and 66% quarter-over-quarter thanks to operational growth offsetting the increase in D&A and finance expenses.
Capital expenditure amounted to EGP 1.7bn representing 17% of sales.
Ahmed El Beheiry, group chief executive, said that TE has been able to maintain its net profit y-o-y with a slight increase in Q2 2018 thanks to the management team’s effort to strictly follow the long-term strategy put before the operational performance level at the beginning of the year and to overcome through operational efficiency the challenges of higher costs of marketing new products, the impact of capex spending on depreciation and the higher borrowing costs.
“I am extremely pleased with the operating profit growth we achieved this quarter of 26% y-o-y, which has helped us to offset all the base effect on the bottom line of being in a new investment phase. It is important to highlight that our strategy relies on targeted investments, in order to fulfil our goals for the company and the country. Our main focus lies on three objectives: first is the successful integration and monetisation of the newly established mobile business to boost growth, second the overhauling Egypt’s internet infrastructure to provide the best service quality and induce revenue plus economic growth, and third to expand Egypt’s international network with the aim of enabling our vision of Egypt as a digital hub. Our ambitious investment strategy, while long-term in nature, has already shown results in H1 2018 with operational profit growing by 11% y-o-y in such a critical phase of the company’s history. We are extremely proud of such performance noting that the impact on net profit in H1 2018 is an expected by-product of such investment strategy and the high interest macro environment,” he added.
He pointed out that the events in the past few months were a direct reflection of their efforts to fulfil the aforementioned strategy. “On the retail side: two critical product launches were introduced to the market; our mobile post-paid product ‘Indigo’ and our fixed broadband revamp to We Internet. Both products target to increase our share of wallet of the customer’s spending, while at the same time offer our customers a completely new top-notch experience. On the wholesale front, several agreements were signed to secure our existing revenue streams, but also to improve our positioning in the mobile market. On the latter, we are very pleased to have been able to revise our national roaming agreement with Etisalat in our favour as well as to achieve asymmetric mobile termination rates through commercial agreements with Etisalat and Orange.”