Telecom Egypt announces nine months 2007 consolidated results

Financial statements have been prepared in accordance with Egyptian Accounting Standards.

Highlights for the nine month period include:

• Total revenues reached EGP7.5bn, an increase of 7.8% on the same period in 2006.

• EBITDA Before Provisions were EGP4.1bn, up 5.5% year-on-year

• EBITDA Margin Before Provisions of 55.4%

• Net Profit after Tax was EGP1.7bn, an increase of 12.3% in comparison to 2006

• Earnings per share (EPS) were EGP 1.00, up 12.3% year-on-year

• Ongoing rationalization results in nine month capex related cash-flows of EGP659m

• Total fixed line subscribers reached 11.03 million, up 3% on the first nine months of 2006

• Monthly ARPU at EGP55.5 an increase of 1.3% over the previous quarter

• Share of the retail ADSL market is 49%, with 152% subscriber growth during the first nine months of 2007

• Positive contribution from Vodafone Egypt of EGP796.7m in the first nine months of the year

Commenting on the company's results for the first nine months of 2007, Akil Beshir, Chairman and CEO of Telecom Egypt, said:

'Today's announcement again demonstrates a sustained and strong growth in revenues and net profit for Telecom Egypt in line with our expectations. Further to my last update, we continue to deliver on the strategy while adapting to a rapidly changing telecoms landscape in Egypt.

'Our fixed line customer base continues to be one of the largest in the region, delivering total revenues for the first nine months of 2007 of EGP7.5bn. These results once again show the evolution in our core business, with revenues from wholesale services, which includes infrastructure leasing, representing 34% of our total revenues.

'Underpinned by our commitment to tight cost controls and a prudent financial strategy, our margins also remain robust. We ended the nine month period with an improved 23% net profit margin.

'Our strategic initiative, TE North, is progressing as planned and as you can see from today's announcement operational contracts are being put in place with customers that we feel confident share our vision and drive for this new venture.'

'TE's Internet and data services arm, TE Data, continues to deliver healthy financial and operational performances. In total it now services almost 50% of the fast-growing Egyptian ADSL market with 172,767 subscribers. Revenues from Internet and data services have increased by 73 percent in comparison to the same nine month period in 2006.

'As the mobile telecoms market continues to grow in Egypt we are also reaping the benefits of our important investment in Vodafone Egypt, one of the leading mobile providers in the country, both financially and strategically. Our cooperation with the Vodafone group begins to yield tangible results with the roll-out of
Vodafone Shop-in-Shops in Telecom Egypt's Centrals. Such initiatives should deliver benefits to both parties, and in turn our respective customers, in the future.'

Financial Review

Revenues

Total consolidated operating revenues for the nine month period to 30 September 2007 rose 7.8 percent to EGP 7.5 billion. This was underpinned by continuing demand for TE's wholesale services from other telecom operators and an upturn in local call revenues during the third quarter post number changes.

Retail services

Revenues for the first nine months of 2007 increased to EGP4.9bn, compared to EGP4.8bn for the same period in 2006.

This increase was mainly driven by an increased take up of Internet and data services from TE's subsidiary - TE Data and an increase in access revenue by 7%. Internet and data revenues increased by 73% from EGP126m to EGP218m for the first nine months of 2006 and 2007 respectively.

TE increased the number of ADSL subscribers by 152 percent to 172,767 in the first nine months of 2007, representing a 48.9% share of the Egyptian ADSL market.

Wholesale services

Continued demand from other telecom operators for use of our state-of the art infrastructure has again translated to an increase in wholesale revenues.

Total wholesale revenues for the first nine months of 2007 were EGP2.5bn, compared to EGP2.0bn for the same period in 2006.

Domestic wholesale revenues increased by 68% to EGP572m, driven by mobile to fixed interconnection and other wholesale revenue. Firstly, the increase in mobile to fixed was as a result of increased traffic generated by mobile operators offering promotions to their customers. Secondly, TE's income from leasing its extensive infrastructure to other telecom providers has continued to grow substantially, almost doubling in a year-on-year comparison for the same nine month period, from EGP178m in 2006 to EGP354m in 2007.

EBITDA/EBIT

Consolidated EBITDA before provisions for the first nine months of 2007 reached EGP4.1bn, a 5.5% increase on the same period in 2006. This resulted in an EBITDA margin before provisions, within management expectations, of 55.4%.

Meanwhile, EBIT for the nine months ended 30 September 2007 was 16.7% up on the previous year, reaching EGP2.5bn.

Income from Investments

Total income from TE's investments for the period was EGP753m, including income from Vodafone Egypt.

During the period under review Vodafone Egypt, one of three licensed providers of mobile communications in Egypt, continued to demonstrate sound operational and financial management.

As of 30 September 2007 (representing the first six months of Vodafone Egypt's financial year), Vodafone Egypt had approximately 11.7m active customers, generating a total of 10.4bn voice minutes. This shows a substantial increase in comparison to the same period in 2006, when Vodafone Egypt had 7.8m active customers generating 6.3bn voice minutes.

Net profit

Consolidated Net Profit for the period was EGP1.7bn, an increase of 12.3% compared to the same period in 2006. This translates to EPS of EGP1.0.

Debt

TE's net debt position as of 30 September 2007 was EGP4.5bn. This represents a reduction of EGP2.3bn in comparison to 31 December, 2006, when TE's net debt rose to EGP6.8bn as a result of the acquisition of an additional 19 percent stake in Vodafone Egypt.