Egypt’s Mobinil expects revenue growth after buying Internet company

Mobinil, which has the biggest number of mobile subscribers in Egypt, said on Sunday it expects revenue growth in the second half of 2010 to outpace the first, when a price war and regulatory hurdles hit its top line.

The operator’s acquisition of internet provider LinkDotNet, which shareholders approved on Saturday, should help boost revenue growth by letting Mobinil expand into the growing data services market, Chief Executive Hassan Kabbani said.

“The first half was not up to the expectations, our expectations. But it is still positive if you look at the growth,” he said on the sidelines of a conference.

“Now we are expecting the second half to be better, because some issues are solved,” he added.

Mobinil, the trade name of the Egyptian Company for Mobile Services, faces an uphill battle keeping market share against the Egypt subsidiary of Britain’s Vodafone and a unit of Abu Dhabi-listed Etisalat, a more recent entrant.

Mobinil revenue grew just 2.4 percent in the first quarter of 2010, while profit dipped 2 percent, disappointing analysts and the stock market.

“Factors affected our results that are beyond the company’s control. I’m talking about regulation issues, I’m talking about market conditions changing, I’m talking about competition, I’m talking about the global economic situation,” Kabbani said.

“All these factors gathered like the perfect storm against us and others.”

Last month, a Cairo court overturned a 2008 regulatory ruling that lowered the fee fixed-line monopoly Telecom Egypt must pay to connect landline calls to mobiles, and which Mobinil had been fighting against for over two years.

While Kabbani welcomed the court’s decision, he said the dispute was not settled because the regulator could appeal.

Delays in the rollout of a new national numbering plan to add an extra digit to all mobile phone numbers in Egypt also hurt Mobinil’s first-half performance, he said.

Mobinil has said it has 30 million dials, the individual mobile phone numbers it provides to subscribers, and more than 26 million active subscribers. The company first requested additional dials in May 2009 and got approval in March.

Kabbani said he expected Mobinil’s $130 million acquisition of LinkDotNet from major shareholder Orascom Telecom to help revenue growth, but declined to specify when the benefit would show up on the balance sheet.

Asked if Mobinil planned to lower the price of internet data services after the purchase, he said: “Not for the time being, as long as demand is higher. But you will see that prices on average will go down.”

“I’m seeing voice revenue is going down, declining, and data revenue is growing fast,” he added.

The LinkDotNet purchase was made possible by a pact in April between Mobinil co-owners Orascom and France Telecom, who had wrangled over ownership of the operator.

Cairo-based Orascom had been unwilling to sell the internet assets while it risked being shut out of its home market.

Source: Reuters