Telecom Egypt (ETEL) Q2 2023 earnings summary

Executive summary

• H1 revenue rose 38% YoY to EGP 28.136bn; EBITDA increased 48% to EGP 11.961bn, with a 42.5% margin.

• Adjusted/normalized H1 net profit reached EGP 6.987bn, up 67%; interim financial statements reported a net loss of EGP 2.068bn, citing foreign-currency losses and higher finance costs.

• Q2 revenue grew 29% YoY to EGP 14.177bn; EBITDA was EGP 5.8bn, with a 41% margin.

Financial highlights

• H1 reported operating profit was EGP 7.367bn, up 45%; adjusted operating profit was EGP 7.5bn, up 54%.

• H1 reported net profit was EGP 6.696bn, up 77%, while adjusted net profit was EGP 6.987bn, up 67%; Q2 adjusted net profit was EGP 2.978bn, up 25%.

• Interim financial statements showed H1 operating profit of EGP 2.750bn, net finance costs of EGP 1.783bn and foreign-currency translation losses of EGP 3.874bn.

• H1 EPS was EGP 3.92, up 77%; financial statements recorded basic and diluted loss per share of EGP 1.21.

Outlook and guidance

• FY 2023 budget targets early double-digit revenue growth, an EBITDA margin in the mid-to-high 30s, in-service CapEx/sales in the early 20s and FCF/EBITDA in the mid-20s.

• FCFF was expected to improve in Q3 and Q4, supported by Vodafone Egypt dividend collection, operating cash flows and revenue from new cable projects.

• Strategic priorities include developing a regional data hub, expanding mobile services, monetizing infrastructure and increasing shareholder returns.

• H1 results were stated not to be indicative of results expected for FY 2023.