* 2011 EBITDA margin flat, beats expectations
* Sees progress on MVNO licence by end of Q1
(Adds comments from executives on 2012)
CAIRO, Feb 23 (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 ($96.8 million), 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.
Chief Executive Tarek Aboualam said business customers who
suffered in 2011 when Egypt's economy was struck by a political
crisis had decided in the last quarter that they could not
continue waiting for a rebound in the country's fortunes.
"Maybe we have reached the bottom. But we cannot say that
the last two months were different to the last quarter ... in
the business sector," Aboualam told Reuters.
Net income in 2011 was held back by a higher corporate tax
rate, but the company played down prospects for any sharp
increase in profits this year.
Chief Financial Officer Hassan Helmy said management
expected flat revenue in 2012 and "to still maintain our EBITDA
margin within the mid-40s range and for capital expenditure we
will be spending 1-1.2 billion Egyptian pounds".
Capital spending in 2011 was 689 million pounds.
EBITDA was 4.55 billion pounds in 2011, down 2.4 percent
from a year earlier, the company said in a statement.
The company is sitting on record amounts of cash and is
looking to acquire a licence to operating a virtual mobile
network in Egypt, but is waiting for the industry regulator to
issue the licence terms.
"They declared they are working on it and theoretically we
should see something coming out from them by the end of Q1. We
will study it and follow this opportunity," said Aboualam.
($1 = 6.0362 Egyptian pounds)
(Additional reporting by Sherine El Madany. Editing by Mark
Potter)
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