15th May 2006 07:03
Telecom Egypt S.A.E15 May 2006 Telecom Egypt Announces Q1 2006 Results Cairo, 15 May, 2006: Telecom Egypt (TE) (Ticker: ETEL.CA; TEEG.LN), todayannounced its standalone financial results for the three months ended 31 March,2006. Financial Statements have been prepared in accordance with EgyptianAccounting Standards. First quarter 2006 highlights include: • Total number of fixed-line subscribers up 10 percent on Q1 2005 to reach 10.49 million • Fixed line penetration rate reached 14.7% compared to 13.7% penetration rate in March 2005 • Revenues reached EGP 2.1 billion, an increase of 7 percent on Q1 2005 • Q1 2006 EBITDA increased by 3% to reach EGP 1.23 billion • EBITDA margin remains one of the industry's highest at 58 percent • Net Profit before Tax up 14 percent year-on-year to EGP 668 million at end Q1 2006 • Net Profit after Tax up 44 percent to EGP 536 million in Q1 2006 from EGP 373 million in Q1 2005 • Capex related cash flows reduced by 22 percent to EGP 500 million • Earnings per Share (EPS) increased by 44 percent to EGP 0.31 compared to EGP 0.22 in 2005 • Monthly ARPU1 stabilized at EGP 54.83 1 ARPU calculation has been changed effective from Q1 2006 to only includerecurring revenues driven by TE's subscriber base. Monthly ARPU = (Subscription + Local + Long Distance + Fixed to International +Fixed to Mobile + Prepaid Calling Cards2+ Mobile to Fixed Interconnection +Incoming International Calls Revenues) / average number of subscribers duringthe period 2 Prepaid Calling Cards revenue included in others under Retail Services Chairman's statement Commenting on Telecom Egypt's first quarter results, Mr. Akil Beshir, Chairmanof Telecom Egypt, said: "The first quarter of 2006 has been a successful start to the year for TelecomEgypt. Operationally, we performed well, maintaining growth levels in ourfixed-line subscriber base and at the same time monthly ARPU was alsostabilized, despite the impact of our tariff rebalancing measures having not yettaken effect. TE's second phase of tariff rebalancing became effective from 1stApril 2006 and is designed to enable us to compete more effectively in Egypt'sfully liberalized telecommunications market. Its effects will be reflected inTE's results for the second quarter 2006, and beyond. "The company's financial performance has been in line with management'sexpectations. We have delivered stable revenue growth of 7 percent and havesuccessfully maintained a very healthy EBITDA margin, which continues to be oneof the highest in the sector. "The telecommunications market in Egypt continues to present exciting growthopportunities for which TE is well poised to embrace. Our strategy for 2006remains to focus on increasing penetration and enabling the expansion of newservices expected in 2007. "Our retail Internet business, TE Data, performed exceptionally well in arapidly growing sector. ADSL subscribers actually increased by over 200 percentrelative to first quarter 2005 and we fully expect the market for Internet, andparticularly for ADSL services, to continue growing strongly. TE Data willcontinue to focus during the remainder of 2006 on developing the broadbandsegment in Egypt while working on further expanding its existing foothold. "While our investment in Vodafone Egypt has again delivered a strong financialresult for our company, we have recently announced our intention to bid for thethird mobile license in Egypt. We have formed what we view as, a very strongconsortium with Telecom Italia and will continue to update you on this as newson the license award become available." Financial Review Revenues Total operating revenues for the three months ended 31 March 2006 rose 7 percentin accordance with management expectations ending the first quarter at EGP 2.1billion, compared to EGP 1.9 billion for the first quarter 2005. Retail Services During the first quarter of 2006, 70 percent of total operating revenues werederived from retail services. Connection revenues have decreased to EGP 40million in Q1 2006, from EGP 85 million for the same period in 2005. Howeverthis decrease was partially offset by the corresponding increase in subscriptionrevenues in Q1 2006 up 10 percent to reach EGP 347 million. Voice During the three months ended 31 March 2006, total revenues derived from voiceservices, including local, long distance, fixed to international and fixed tomobile interconnection accounted for 60 percent of total revenue from retailservices. Total voice revenues increased by 6 percent to reach EGP 891 million,from EGP 842 million for the same period in 2005. Increases in both voice traffic and dial-up Internet usage, have resulted in a15 percent year-on-year increase in revenues from local calls to LE 439 millionfor the first three months of 2006. The growing fixed-line penetration has alsoresulted in more subscribers having access to domestic long-distance services,with revenues from long distance calls up 4 percent on Q1 2005. Wholesale services Total wholesale services revenues, both domestic and international, increased 20percent on those achieved in the first quarter of 2005. In Q1 2006, totalrevenues from domestic wholesale services were boosted by increase in incominginternational call revenue as well as mobile to international revenue. EBITDA/EBIT TE's robust financial controls allowed it to maintain one of the highest EBITDAmargins in the telecommunications market, at 58 percent for the three monthsended 31 March 2006. EBITDA for the first quarter of 2006 stood at EGP 1.2billion, a 3 percent increase on the same period in 2005. EBIT for the three months ended 31 March 2006 was also increased, reaching EGP736 million, up 6 percent on the same period in 2005. This consistency resultedin an EBIT margin of 34.6 percent, compared to 35.1 percent in the first quarterin 2005. Income from Investments In line with TE's expectations, exposure to the mobile segment within Egypt isdelivering significant benefit to the company. Income from investments reachedEGP 165 million representing a growth of over 540% relative to the first quarterof 2005 mainly driven by increase in dividend income from Vodafone Egypt. Net profit Net profit increased by 44 percent to EGP 536 million for the three months ended31 March 2006 compared to EGP 373 million for the first quarter 2005.Increasing operating profits, up 14 percent on first quarter 2005, werepositively impacted by a significant increase in income from investments, aswell as a reduction in the corporate tax rate which reduced current tax expenseby 38 percent. Investments in infrastructure TE exerted tight controls on capital expenditures made during the three monthsended 31 March 2006. Capex decreased by 22 percent to EGP 500 million from EGP644 million for the same period in 2005. This reduction reflects TE's strategyto ease back its investment in the company's extensive network gradually as itstargets for coverage and capacity are attained. Debt Total debt has been reduced by 1.2 billion during the twelve months between 31March 2005 and 31 March 2006, standing at EGP 4.3 billion at the end of thefirst quarter 2006. The accompanying notes to these financial statements can be accessed via the following link. Please copy and paste this link into your web browser. http://www.rns-pdf.londonstockexchange.com/rns/9467c_-2006-5-15.pdf - Ends - For further information: Investor Relations Contacts Tarek Tantawy, CFA Director - Investment, Treasury & Investor Relations Telephone: +202 5788111 Fax: +202 5789314 Eman Anis Assistant Manager - Investor Relations Telephone: +202 5788787 Fax: +202 5789314 E-mail: [email protected] Notes to Editors: Within this statement, we may make forward-looking statements regarding futureevents or the future performance of the Company. By their very nature,forward-looking statements involve inherent risks and uncertainties, bothgeneral and specific, and risks exist that the predictions, forecasts,projections and other forward-looking statements will not be achieved. Youshould be aware that a number of important factors could cause actual results todiffer materially from the plans, objectives, expectations, estimates andintentions expressed in such forward-looking statements. When relying onforward-looking statements, you should carefully consider the political,economic, social and legal environment in which Telecom Egypt operates. Suchforward-looking statements speak only as of the time of this release today.Accordingly, Telecom Egypt does not undertake any obligation to update or reviseany of them, whether as a result of new information, future events or otherwiseother than as required by applicable laws, the Listing Rules or Prospectus Rulesof the United Kingdom Listing Authority, the Egyptian Capital Markets Authorityor the Cairo and Alexandria Stock Exchange. The documents filed from time totime with these authorities may identify important factors that could causeactual results to differ materially from those contained in any forward-lookingstatements. About Telecom Egypt Telecom Egypt (TE), Egypt's incumbent telecommunications operator, started itsoperations in 1854 with the first telegraph line in Egypt. Then it wascorporatized in 1998 to replace the former Arab Republic of Egypt NationalTelecommunication Organization (ARENTO). The Company is the largest provider offixed-line services in the Middle East and Africa with 10.5 million subscribersas at the end of March 2006 representing a teledensity of 14.7 percent. TE provides retail telecommunication services including access, local, longdistance and international voice, Internet and data, and other services. Thecompany also provides wholesale services including bandwidth capacity leasing toISPs, and national and international interconnection services. Telecom Egypt'sservices also include the provision of narrowband and broadband internet accessthrough its subsidiary TE Data. TE Data has current operations in Egypt, Jordan,and Dubai and has ambitious plans in other parts of the MENA region. TE currently participates in the mobile segment in Egypt by providing mobileinterconnectivity and though its current 25.5 percent holding in Vodafone Egypt,one of the two Egyptian mobile operators. TE's shares and GDRs (Ticker: ETEL.CA; TEEG.LN) are traded on the Cairo andAlexandria Stock Exchanges and the London Stock Exchange. Auditor's Limited Review Report to the Board of Directors of Telecom Egypt Company We have performed a limited review on the accompanying balance sheet of TelecomEgypt Company - an Egyptian joint stock company - as of March 31, 2006 and therelated statements of income, cash flows and changes in equity for the financialperiod then ended. These financial statements are the responsibility of thecompany's management. Our responsibility is to issue a report on these financialstatements based on our review. Our review was made in accordance with the Egyptian Standards on Auditingrelating to the limited review. This standard requires that we plan and performthe review to obtain reasonable assurance that the financial statements are freeof material misstatement. Our review work is limited to obtaining the requiredinformation from company's personnel and analytical procedures applied forfinancial data and thus provide less assurance than the audit procedures appliedaccording to the Egyptian Standards on Auditing for the purpose of issuing anopinion on the financial statements and accordingly, we do not express thisopinion. Based on our limited review for the financial statements of Telecom EgyptCompany for the period ended March 31, 2006 nothing has come to our attentionthat causes us to believe that the accompanying financial statements are notpresented fairly in all material respects in accordance with Egyptian AccountingStandards. KPMG Hazem Hassan Public Accountants & Consultants Cairo, May 6, 2006 Telecom Egypt Financial Statements Financial Position As of March 31st 2006 Note 31/3/2006 31/12/2005 No. LE(000) LE(000)Long Term AssetsFixed assets (net) (4) 21 395 618 21 763 811Projects in progress (5) 1 123 170 1 139 739Investments in subsidiaries & (6-1) 1 429 494 1 429 494affiliatesAvailable for sale investments (6-2) 95 305 95 197Other debit balances - long term (7) 1 136 486 1 422 901Other assets (8) 93 456 99 799Total Long Term Assets 25 273 529 25 950 941Current AssetsInventories (9) 456 582 486 523Trade receivables (10) 3 005 487 2 521 199Debtors and other debit accounts (11) 2 285 300 2 239 120Cash at banks and on hand (12) 915 397 698 463Total Current Assets 6 662 766 5 945 305Current LiabilitiesLoans installments and facilities due within one year (13) 420 683 476 487Banks - credit accounts 217 229 419 061Banks overdraft 23 527 157 349Suppliers (14) 44 073 94 287Creditors and other credit accounts (15) 3 945 538 2 936 691Provisions (16) 1 260 201 1 255 074Total Current Liabilities 5 911 251 5 338 949Working Capital 751 515 606 356Total investments 26 025 044 26 557 297Financed as follows:-Shareholders' Equity & Long Term LiabilitiesShareholders' EquityPaid up capital (17) 17 070 716 17 070 716Reserves (18) 4 157 085 3 415 291Retained earnings 527 842 384 638Net profit for the period / year 536 213 1 835 871Total Shareholders' Equity 22 291 856 22 706 516Long Term LiabilitiesLoans and credit facilities (13) 1 616 387 1 734 821Bonds loan (33) 2 000 000 2 000 000Creditors and other credit balances (15) 54 704 54 704Deferred tax liabilities (21-3) , (19) 62 097 61 256Total Long Term Liabilities 3 733 188 3 850 781Total Shareholders' Equity and Long Term Liabilities 26 025 044 26 557 297 The accompanying notes from No. (1) to No. (37) form an integral part of these financialstatements. Income Statement For the Financial Period from January 1,2006 to March 31, 2006 For the For the Financial Period Financial Period From 1/1/2006 From 1/1/2005 Note To 31/3/2006 To 31/3/2005 No. LE(000) LE(000)Operating RevenuesSales of services (20) 2 112 336 1 950 497Sales of telephone sets & directories 14 644 30 191 2 126 980 1 980 688Operating ExpensesInterconnection fees (21) 294 922 285 691Fuel 11 926 10 479Spare parts 43 808 40 744Maintenance 11 551 16 294Satellite subscriptions 5 514 6 193Depreciation & Amortization 662 116 685 932Cost of telephone sets & directories sold 29 165 36 335Other operating costs (22) 224 664 210 082 1 283 666 1 291 750Gross Operating Profit 843 314 688 938 Administrative expenseGeneral & administrative expenses (23) 212 755 170 181Selling & distribution expenses (24) 49 326 27 764Provisions (16) 5 127 12 189Impairment loss on trade and other receivables (16) 31 332 298 540 210 134Net Operating Profit 544 774 478 804 Other Income / (Expenses)Interest income 10 196 5 667Income from investments 165 416 25 800Interest expenses ( 76 319) ( 107 452)Other revenues (expenses) (25) 48 337 ( 19 177)Impairment loss on long-term investments 108Gain on sale on long-term investments 20 941Gain on sale of fixed assets 1 310Foreign exchange ( loss) gain ( 25 764) 181 722 123 284 107 501Net profit for the period before tax 668 058 586 305Current tax expense 131 004 213 187Deferred tax expense 841Net profit for the period after tax 536 213 373 118Earnings per share (LE / Share) (28) 0.31 0.22 The accompanying notes from No. (1) to No. (37) form an integral part of these financial statements. Statement of Cash Flows For the Financial Period from January 1,2006 to March 31,2006 For the For the Financial Period Financial Period From 1/1/2006 From 1/1/2005 Note To 31/3/2006 To 31/3/2005 No. LE(000) LE(000)Cash flows from operating activitiesCash receipts from trade receivables 1 483 284 1 600 527Sales tax collected from receivables 114 928 105 150Stamp tax and fees collected (from third party) 55 855 52 242Deposits received from receivables 12 573 18 706Cash paid to suppliers ( 199 254) ( 227 651)Cash paid to employees ( 214 395) ( 226 119)Cash paid on behalf of employees ( 74 080) ( 65 514)Dividends paid to shareholders & employees ( 50 976) ( 207 065)Cash generated from operating activities 1 127 935 1 050 276 Interest paid ( 96 879) ( 173 335)Payments to Tax Authority ( 74 376) ( 78 399)Payments to sales Tax Authority ( 106 964) ( 140 015)Other proceeds /(payments) net 51 533 ( 2 723)Net cash provided by operating activities 901 249 655 804 Cash flows from investing activitiesPayment for purchase of property, plant and equipment ( 325 098) ( 379 386) and projects in progressPayments for purchase of investments ( 627 545)Proceeds from sale of investments 88 294Interest received 7 802 2 053Dividends received 154 207 76 801Net cash used in investing activities ( 163 089) ( 839 783)Cash flows from financing activitiesRepayment of borrowings & facilities relating to ( 174 239) ( 264 895) acquisition of property, plant and equipment and projects in progressRepayment of borrowings & facilities relating to others (1 414 608)Proceeds from long - term loans 29 531Proceeds from long - term bonds issued 2 000 000Change in banks credit accounts ( 201 832) ( 773 529)Payment of financial lease obligations ( 11 333) ( 6 001)Net cash used in financing activities ( 387 404) ( 429 502)Net Increase (Decrease) in cash and cash equivalent 350 756 ( 613 481)Cash and cash equivalent at the beginning of the period 541 114 1 041 107Cash and cash equivalent at the end of the period (29) 891 870 427 626 The accompanying notes from No.(1) to No. (37) form an integral part of these financial statements. The accompanying notes to these financial statements can be accessed via the following link. Please copy and paste this link into your web browser. http://www.rns-pdf.londonstockexchange.com/rns/9467c_-2006-5-15.pdf This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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