Egypt's Mobinil leaves investors hanging on

Egypt's Mobinil has hung up on investors hoping for some idea of what the future may hold. The telecoms operator said not only would it miss its full-year goals for subscriber numbers and revenue growth, but it would not be providing any forecasts either. "We are not giving guidance for the end of the year, especially on top line and profitability, because of the fluid ? and very aggressive competition we see," the firm's chief financial officer, Khalid Ellaicy, said in a conference call.

The firm posted a 29 per cent drop in second-quarter net profit to US$66.8 million. The news was particularly disappointing because telecommunications companies have been among the steadiest performers in the region, especially when compared with banking and property stocks, which continue to battle the effects of the financial crisis. Mobinil has added just 26,000 subscribers in the quarter that ended last month, keeping its total of 26.1 million barely above that of its rival Vodafone Egypt, which added 1.2 million in the same period to 25.7 million.

Mobinil is clinging on to its position as Egypt's largest network operator by subscribers, but said it could not reach 28 million users by December and that revenue would not grow 5 per cent this year, projections it had given in February. Mr Ellaicy blamed a regulatory delay in handing out new dials - the mobile numbers it gives to customers - for most of the drag on subscriber growth. Mobinil received 1 million dials in June after requesting them last year, to take its total to 31 million. It has since asked for 2 million more. "It's not clear why the dials aren't coming," Mr Ellaicy said.

He indicated the company would be willing to sacrifice its earnings in the next quarter to devote resources to the battle for subscribers. "Defence of our market share is paramount, (which) involves extra spending in the third quarter that will bring down the (earnings) margin a little bit. We will take that hit," Mr Ellaicy said. The stock closed up more than 1 per cent yesterday after hitting a 52-week low on Wednesday.

* with Reuters breagan@thenational.ae