Q2 2024 Results: Telecom Egypt Rises above Macroeconomic Headwinds with Strong Results for H1 2024
14 August 2024
H1 2024 key highlights
“Telecom Egypt's performance in the first half of 2024 exemplifies our resilience in navigating complex macroeconomic challenges, including currency devaluation and inflationary pressures, while sustaining robust growth.
Our total revenue for the period surged by 35% YoY, reaching EGP 38.0 billion, underscoring our strong market position and the effectiveness of our diversified service portfolio. Notably, our Retail segment revenue soared by 40% YoY, driven by a 46% increase in Data revenue and expansion across all Retail segments. This growth reflects our competitive edge and dedication to delivering exceptional value to our customers. Furthermore, our international operations, including ICA and IC&N, achieved remarkable annual growth of 58% and 28%, respectively, benefiting from foreign currency appreciation and higher traffic volumes. Despite the impact of inflation on rising costs, our EBITDA reached EGP 15.5 billion, with a margin of 41%, highlighting our adept cost management, effective infrastructure monetization, strategic price adjustments, in addition to leveraging the continuously growing data market locally and internationally, which is considered one of the principle drivers for the company’s revenue growth.
Our Cash CapEx for the period amounted to EGP 27.4 billion. This increase is largely attributed to EGP 7.5 billion in vendor financing payments, which represent 68% of the budgeted amount for the whole year, and EGP 6.4 billion in license payments. This means that a significant portion of our CapEx for the year has already been expended in the first half. Although our Free Cash Flow to Firm (FCFF) recorded EGP -10.4 billion, excluding license fees and factoring in the EGP 3.1 billion in dividends received from VFE in July 2024, FCFF stands at EGP -958 million. Moving forward, we remain committed to optimizing future CapEx while ensuring that our business growth remains unhindered.
Our vision for Telecom Egypt is to establish ourselves as a leading regional data hub and drive growth across all business fronts. We are focused on enhancing the customer experience, maximizing the value of our infrastructure and assets, and delivering superior returns for our shareholders. As we look ahead, we are optimistic about the company's future and believe that macroeconomic stability will positively influence our financial position. We are confident that our strategic growth initiatives, resilient business model, and agile execution will continue to position us for sustained success and growth.”
- Consolidated revenue grew 35% YoY, recording EGP 38.0bn. This growth was fueled by a 46% YoY hike in Data revenue across the Retail segment, constituting 48% of top-line growth, followed by International Direct Dialing (IDD) and Capacity Sales revenues growing by 51% and 103%, respectively.
- Customer base grew across all segments. Fixed Voice and Fixed Broadband subscribers both grew by 8% YoY, while Mobile subscribers increased by 4% YoY.
- EBITDA reached EGP 15.5bn, increasing 29% YoY and recording a margin of 41%. The enhanced revenue mix, along with cost optimization efforts, maintained the EBITDA margin at targeted levels despite the prevailing inflationary pressures.
- Net profit landed at EGP 6.5bn, almost flat YoY, with an implied margin of 17%. The solid operational growth and the substantial 52% YoY growth in VFE’s income, supported by the recent price ups, managed to neutralize the pressure of a 2.6x higher interest expense YoY and the EGP 0.5bn FX losses due to the currency devaluation.
- In-service CapEx recorded EGP 8.0bn (representing 21% of sales), while Cash CapEx reached EGP 27.4bn, representing around 80% of total Cash CapEx budgeted for FY 2024. It is worth noting that the hike witnessed in Cash CapEx was partially caused by foreign currency appreciation, and vendor financing payments, which amounted to EGP 7.5bn in H1 2024, representing 68% of the EGP 10.9bn to be paid throughout FY 2024.
- Net debt/EBITDA marked 2.4x in H1 2024 vs 1.7x in FY 2023, mainly on the currency depreciation.
- FCFF recorded EGP -10.4bn, pressured by the vendor financing payments of EGP 7.5bn in H1 2024 (68% of the budgeted payments throughout FY 2024), in addition to the EGP 6.4bn related to the license. It is worth highlighting that FCFF stands at EGP -958mn when we exclude the license fees and account for the EGP 3.1bn (net of tax) dividends received from VFE in July 2024.
“Telecom Egypt's performance in the first half of 2024 exemplifies our resilience in navigating complex macroeconomic challenges, including currency devaluation and inflationary pressures, while sustaining robust growth.
Our total revenue for the period surged by 35% YoY, reaching EGP 38.0 billion, underscoring our strong market position and the effectiveness of our diversified service portfolio. Notably, our Retail segment revenue soared by 40% YoY, driven by a 46% increase in Data revenue and expansion across all Retail segments. This growth reflects our competitive edge and dedication to delivering exceptional value to our customers. Furthermore, our international operations, including ICA and IC&N, achieved remarkable annual growth of 58% and 28%, respectively, benefiting from foreign currency appreciation and higher traffic volumes. Despite the impact of inflation on rising costs, our EBITDA reached EGP 15.5 billion, with a margin of 41%, highlighting our adept cost management, effective infrastructure monetization, strategic price adjustments, in addition to leveraging the continuously growing data market locally and internationally, which is considered one of the principle drivers for the company’s revenue growth.
Our Cash CapEx for the period amounted to EGP 27.4 billion. This increase is largely attributed to EGP 7.5 billion in vendor financing payments, which represent 68% of the budgeted amount for the whole year, and EGP 6.4 billion in license payments. This means that a significant portion of our CapEx for the year has already been expended in the first half. Although our Free Cash Flow to Firm (FCFF) recorded EGP -10.4 billion, excluding license fees and factoring in the EGP 3.1 billion in dividends received from VFE in July 2024, FCFF stands at EGP -958 million. Moving forward, we remain committed to optimizing future CapEx while ensuring that our business growth remains unhindered.
Our vision for Telecom Egypt is to establish ourselves as a leading regional data hub and drive growth across all business fronts. We are focused on enhancing the customer experience, maximizing the value of our infrastructure and assets, and delivering superior returns for our shareholders. As we look ahead, we are optimistic about the company's future and believe that macroeconomic stability will positively influence our financial position. We are confident that our strategic growth initiatives, resilient business model, and agile execution will continue to position us for sustained success and growth.”