UPDATE 2-Telecom Egypt cuts dividend, delays cable launch

* 0.75 Egyptian pound dividend, versus 1.3 pounds in 2008

* TE North opening pushed back to Q2 2010

* Shares down 8.7 pct, index ends 3.8 pct lower

* CEO sees 2010 growth from wholesale and internet

(Adds outlook, details from analyst call, presentation)

By Alastair Sharp

CAIRO, March 15 (Reuters) - Telecom Egypt (ETEL.CA), whose quarterly earnings were hit by a slide in retail revenues, cut its dividend and delayed the launch of an undersea cable until the second quarter, sending its shares sharply lower.

The full-year figures equated to fourth-quarter net profit of 481 million Egyptian pounds ($89 million) on revenue of 2.2 billion pounds, according to Reuters calculations, lagging the 732 million pounds seen in a Reuters poll. [ID:nLDE62D0CZ] [ID:nLDE6270GJ]

"It was a disappointing fourth quarter," said Nemat Choucri, a telecom analyst at HC Securities. "The net income is significantly lower than our and consensus estimates," she said.

Elsewhere, CI Capital downgraded the firm to "sell" from "buy" following the results, which they said disappointed due to lower revenues, tighter margins, a lower net interest income and a fourth quarter impairment charge of 125 million pounds.

Telecom Egypt said the impairment charge was tied to a contract row with Egypt's mobile firms over interconnect fees

In response, shares in the landline monopoly closed 8.7 percent lower, underperforming a 3.8 percent fall in the main index .EGX30.

DELAYS, DIVIDEND DISAPPOINTMENT

In addition to the disappointing result, Telecom Egypt also said it was delaying launch of its TE North cable, from Egypt's Mediterranean coast to Marseille in France, which was due to begin operating by the end of 2009.

"The cable should be up and running sometime in the second quarter of this year," Telecom Egypt Chief Executive Tarek Tantawy said in a phone interview, without giving a reason for the delay.

He said the firm, in which the government retains an 80 percent stake, would pay a dividend of 0.75 Egyptian pounds ($0.14) per share pending shareholder approval at a meeting on March 31. It paid a 1.30 pound dividend in 2008.

Beltone Financial analyst Sally Gerges said she had expected a significantly higher dividend, adding management had told analysts on a conference call that the lower dividend was due to their interest in bidding for a possible fourth mobile licence, and that if there was no progress on the licence in six months they would consider an interim dividend.

HC's Choucri said the lower revenue figure could be partially explained by the delay opening TE North, adding that the firm's 45 percent stake in Vodafone Egypt (VOD.L) contributed a larger share of profits than a year ago.

Telecom Egypt's voice revenues fell 13 percent in 2009, an investor presentation posted on the firm's website showed. It also showed that the share of total revenues from wholesale operations -- use of its infrastructure by other firms -- had jumped to 42 percent from 39 percent.

Tantawy said most growth in 2010 would come from the firm's wholesale and internet operations, with fixed-line growth muted.

"I do not see the customer base going back to 11 million in 2009... I expect some additions because of new households but nowhere near the 1.5 or 2 million (lost in 2009)," he said.

The firm said it had a total of 9.55 million fixed-line subscribers at the end of December, compared with 9.63 million at the end of September. It cut off some 2 million lines earlier in the year to reduce debt exposure.

The firm expects revenue to be flat to 2 percent lower in 2010, with an EBITDA margin in the "mid 40s", it said in a guidance statement. It said capital expenditure was seen at between 1.5 billion and 2 billion pounds and total broadband subscribers should reach as much as 1.5 million, representing a 63 percent market share.

Internet arm TE Data added 201,000 subscribers in 2009 for a total of 625,000, giving it a market share of 61 percent. ($1 = 5.473 Egyptian pounds) (Editing by Simon Jessop)