CAIRO (Reuters) - Egyptian telecoms company Etisalat Misr aims to invest heavily in modernizing its network this year and book a higher share of revenue from internet services as it works to offset the impact of a fall in its subscriber base, its CEO said.
The firm’s parent company, UAE-based Etisalat, is targeting double-digit revenue growth for the business in 2019, Chief Executive Hazem Metwally also said in an interview with Reuters.
Etisalat Misr’s revenue rose about 16 percent in 2018 to around 13.6 billion Egyptian pounds ($795 million).
Part of the growth target for this year involves increasing the proportion of internet services revenue to 35 percent from 30 percent, he said, and the business expected to pay a dividend on this year’s earnings as it also did in 2018, “if there is no impact on the exchange rate that affects us.”
The Egyptian unit’s net profit jumped nearly 40 percent in 2018 to 1.16 billion dirhams ($320 million), according to financial statements from the parent company, which is 60 percent owned by the UAE’s sovereign wealth fund.
Metwally, previously head of consumer marketing at Vodafone Egypt, said the 4G frequencies Etisalat Misr bought for $535.5 million in October 2016 were adequate.
“At the moment we do not need new frequencies immediately, but we may need them in the future,” he said. “Fourth generation (4G) services allow us to transfer more data and control our costs.”
The same year it also paid $11.3 million for an additional license for landline services.
Competition in Egypt’s mobile phone market is growing amid rising service penetration. Average mobile calling rates there are among the lowest in the Middle East.
Metwally said the market was “moving at a steady pace and ... there are no price wars”, while provision of services and internet speeds were being stepped up.
However, he said progress was being hampered by a fee of 50 Egyptian pounds that the government imposed in mid-2018 for each new mobile phone line.
“The company’s number of customers has been greatly affected by the development fee, as have line sales,” Metwally said, adding that Etisalat Misr has around 27 million customers compared with around 31 million at the end of 2018.
Egyptian authorities are targeting around 1 billion pounds in revenue in fiscal year 2019/2020 from the fee.
With the country’s three other operators - Vodafone Egypt, Orange Egypt and state-owned Telecom Egypt - also affected by the fee, Etisalat Misr was working to upgrade its services “with investments of 4.5 billion pounds this year ... including more than 3 billion pounds to modernize the network.”
Its 2018 investments were also around 4.5 billion Egyptian pounds.
Metwally said Etisalat Misr planned to roll out fixed-line services in less than two years and had already activated hundreds of lines “experimentally”.
Telecom Egypt monopolized fixed-line telephone services until the end of 2016, when other telecom operators signed for licenses.
Metwally said a five-year agreement to provide Telecom Egypt with 2G and 3G mobile services through Etisalat Misr would not impact its network.
Reporting by Ehab Farouk; Writing by Yousef Saba; Editing by John Stonestreet and David Holmes