CAIRO: Egypt’s Orascom Telecom (OT) posted a 2010 fourth quarter net loss of $178.8 million, citing restrictions by the Algerian government on its unit there, the company’s most profitable asset.
The firm’s fourth-quarter profits were also hit by impairment losses related to its investment in Namibia, and its MedCable business in Algeria, the firm’s trans-Mediterranean undersea cable.
OT’s fourth-quarter results missed analyst forecasts. Five analysts polled by Reuters had expected a fourth-quarter net profit of $86.03 million on average.
Analysts had expected that the company would reverse a loss of $46.4 million in the same period of 2009 when the business was hit by riots in Algeria that damaged its property and wiped $96 million off the bottom line.
"The (fourth quarter) net profit was not in line with our expectations. We had expected a net profit of $56 million. The impairment losses totaled $128 million, hence the net loss," said telecoms analyst Sally Gerges.
OT had full-year 2010 revenue of $3.8 billion and group EBITDA margin of 41.4 percent. Orascom’s Algerian unit, Djezzy, its biggest single source of revenue, posted a 6.5 percent drop in 2010 revenues to $1.747 billion.
"While the majority of our operations have displayed strong and stable growth, the Algerian unit, due to the consistently hostile operating environment has faced a decrease in revenues… compared to the year end of 2009," Khaled Bichara, group chief executive, said in a statement.
Orascom Telecom said it had an increase in revenues in its units in Pakistan, Bangladesh, Africa and North Korea as their subscriber bases grew.
The company said the Algerian government, with which it has had a long-standing dispute over Djezzy, had placed restrictions on its operations including hindrance of promotions and a ban on imports including of SIM cards.
"Although the SIM card shortage has now been contained, it impacted the year-on-year decline in revenues," the company said in a statement. OT has 58 percent market share in Algeria, it said.
The dispute over Djezzy has complicated a $6 billion-plus deal in which Russia’s Vimpelcom is taking control of OT and its parent, Wind Telecom, from Egyptian tycoon Naguib Sawiris.
Vimpelcom said on Friday it had completed the transformational acquisition, creating the world’s sixth-largest mobile provider.
Vimpelcom will next week seek talks with Algeria on Djezzy. OT’s Sawiris on Thursday expressed doubt Vimpelcom would succeed in talks with the Algerian government over the dispute. Orascom said it would resort to international arbitration if talks were not successful.
Consultants hired by Algeria to value Djezzy are scheduled to complete their work by the end of May.
Shares in OT, which had more than 101 million subscribers by the end of December, closed down 4.1 percent on Monday before the results were released.
The main index shed 3.17 percent as a widening crackdown on graft by officials of former president Hosni Mubarak’s government darkens an already murky investment outlook.
