UPDATE 2-Telecom Egypt profits fall as rivals encroach

* Broadband a growth area, while fixed-line subscribers slip

* Q3 net falls 13 percent but beats forecasts

* CEO says to roll out fibre networks at 4-5 sites next year

(Adds quotes from interview with CEO, details)

By Cynthia Johnston

CAIRO, Nov 12 (Reuters) - Fixed-line monopoly Telecom Egypt (ETEL.CA) (ETELq.L) posted lower third-quarter profit as rivals from the mobile sector continue to lure away voice and data clients and push the firm to open up to new revenue streams.

Third quarter net profit fell 13 percent to 826 million Egyptian pounds ($151 million), but soundly beat the 657.2 million average predicted by four analysts polled by Reuters.

"Our business model is very quickly adapting to the rapid changes happening in the market and the aggressive competition which is intensifying on the mobile operators front," Chief Executive Officer Tarek Tantawy told Reuters in an interview.

Broadband internet remained a main growth area with its data arm reporting 68 percent year-on-year growth in total broadband customers to 572,000. However, fixed-line subscribers dropped 15 percent year-on-year to 9.6 million, while monthly Average Revenue Per User (ARPU) in the quarter dipped by 7 percent.

While mobile operators try to attract people away from fixed-line, Egypt is preparing to offer two combined cable television, telephone and internet licences that could open the way to breaking Telecom Egypt's monopoly.

The government tender for the licences is expected to generate $1 billion over five years. The new operators will initially be limited to working in Egypt's rapidly expanding new residential compounds in suburbs and satellite cities.

TRIPLE PLAY

In a bid to gain a head start, Telecom Egypt launched "triple play" telecoms services last month shortly after the tender was announced, and said on Thursday it would roll out fibre networks in at least four or five big compounds next year.

The company had said in October it was launching its first fibre-to-the-home service in the Cairo suburb of Kattamia.

"We would continue to roll out fibre in areas where we see demand for high-speed internet connectivity and content services as well," Tantawy said.

"The best thing we would do in light of the anticipated competition is what we are doing today, to pre-emptively have a first move and advantage and start offering the service in many of those compounds," Tantawy said.

He does not think the new triple play licences would include voice services, as the regulator has said.

"I wouldn't position the two new licences as a full-fledged competitor for us. We look at them as competition in a certain segment and customers of our wholesale services as well."

Telecom Egypt said it had been able to repay 1.6 billion pounds in debt in the first nine months of 2009, and would settle another 400 million pounds of debt before the end of the year. The firm said it had reached a net cash position of 737 million pounds, three months ahead of target.

"Since we are one of the best capitalised companies in the sector at large, that obviously opens the doors for many opportunities for us. So we are open today to explore acquisitions when and if they arrive," Tantawy said.

The firm said revenues fell 5.5 percent to 2.54 billion in the quarter. Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) after subtracting provisions dropped 11.2 percent to 1.245 billion pounds.

The shares were up 0.45 percent at 17.85 pounds by 1217GMT while the benchmark EGX30 index .EGX30 fell 2.2 percent. ($1 = 5.4574 Egyptian pounds) (Editing by Joel Dimmock)