Full Year 2019 results: All-time high net profit

Full year 2019 key highlights

• Consolidated revenue increased 13% YoY, landing at EGP 25.8bn. The growth was mainly driven by higher data-related revenue across the Home, Enterprise and Domestic wholesale segments.

• Customer base is growing on all fronts with fixed voice and broadband customers growing 11% and mobile customers 33% YoY.

• The Early Retirement Program (ERP) was a success with c3,000 employees enrolled at a total cost of EGP1.3bn.

• EBITDA stood at EGP 5.8bn, flat YoY. Excluding the ERP, EBITDA would have reached EGP 7.1bn, growing 21% YoY and recording a margin of 28%, within our full year guidance.

• Net profit climbed 33% YoY to EGP 4.4bn thanks to our strong top line performance, FX gains and higher investment income from Vodafone, which offset the effect of the ERP and the hike in D&A expenses.

• In-service CapEx intensity exceeded our guidance reaching 49% in light of the company's expedited plan to complete its copper-to-fibre replacement program in 2 years rather than 4, ending by mid-2020.

• Net debt amounted to EGP 15bn, representing 2.1x of (ERP adjusted) EBITDA compared to 2.2x in FY 2018.

• The management proposed a dividend of EGP 0.25 per share for FY 2019.

Adel Hamed, Group Chief Executive, commented:

'Telecom Egypt has come out of 2019 with very strong performance and results. The company was able to provide liquidity to carry out a crucial cost saving initiative, namely the Early Retirement Program (ERP), and provide and execute the investments needed to dramatically improve internet quality and infrastructure in Egypt. Our revenue and EBITDA (ERP adjusted) have grown by double digits, fuelled by the increased demand for high quality data services in both the retail and wholesale business units. We have also recorded the highest net profit in the company's history, crossing EGP 4.4bn, and would have reached the EGP 5bn mark if it were not for the effect of the ERP.

This year, we were predominantly focused on preparing ourselves for a digital future both within Telecom Egypt and across the nation. We are strictly abiding by our overarching strategic pillars designed to promote Telecom Egypt's development into a total ICT provider able to position the country as a regional digital hub. Our CapEx for the year has amounted to EGP 12.7bn, reflecting our strong commitment to developing our network infrastructure. In result, Telecom Egypt was able to bear the fruits of its investments with the successful commercial launch of WE SPACE, which introduced unmatched speeds to the market, and supported the expedited execution of the digital national initiative to connect governorates with fibre.

I would also like to take this opportunity to reiterate our position in regards to the potential transaction between Vodafone Group and STC. Telecom Egypt has ensured that its options are open to make an educated decision that serves the benefits of its shareholders in regards to its investment in Vodafone Egypt. We have worked tirelessly to ensure that our legal rights are enforceable and that our decision is based on the best interest of our shareholders, who we are committed to protect. We see an opportunity to be unlocked in multiple scenarios whether through in-market synergies or an exit that ensures that the monetization of the asset is utilized to create shareholder returns. Today, our Board of Directors has also approved to engage with EFG Hermes and Citi Bank as investment advisors and Al Tamimi & Co. as our legal advisor. With this strong consortium on our side, Telecom Egypt is very well positioned to ensure that its shareholders gain the maximum benefit out of the opportunities that are currently presented.'