Telecom Egypt, a leading integrated telecom operator, has reported remarkable results for the first quarter of 2023. The company witnessed significant growth across various aspects of its business, including revenue, customer base, profitability and financial stability.
One of the key highlights of Q1 2023 was the impressive 48% year-on-year growth in consolidated revenue, reaching EGP 14 billion. This growth was primarily driven by wholesale units, which accounted for 70% of the total growth. The company also experienced a substantial increase of 86% in infrastructure revenues year-on-year, along with growing USD-denominated revenue streams.
Telecom Egypt successfully expanded its customer base in all sectors. Fixed voice and broadband services saw 5% and 7% year-on-year growth, respectively, while mobile customers surged by 22% to reach a total of 12.4 million.
The company's EBITDA (earnings before interest, taxes, depreciation and amortization) showed an impressive climb of 72% year-on-year, recording EGP 6.1 billion. This substantial increase reflects a robust margin of 44%, primarily driven by high-margin revenues.
In terms of profitability, Telecom Egypt's adjusted operating profit soared by 101% year-on-year. The strong operational performance effectively offset the 31% increase in depreciation and amortization costs. Excluding non-operating one-offs, the net profit spiked by 144% year-on-year, reaching EGP 4.1 billion. This remarkable growth was attributed to healthy margins and increased investment income, which overshadowed the higher depreciation and finance costs.
Telecom Egypt also demonstrated strong financial discipline, with a free cash flow (FCF) of EGP 0.6 billion. Excluding the last tranche of the new spectrum payment, the FCF reached EGP 2.6 billion, implying a FCF/EBITDA ratio of 43%. The company's in-service capital expenditure (capex) accounted for EGP 1.3 billion, representing 9% of revenues, while cash capex reached EGP 6.1 billion, with a cash capex to sales ratio of 43%. Excluding the spectrum payment, this ratio dropped to 28%.
Despite an inflated gross debt of +34% quarter-on-quarter due to the revaluation of foreign currency obligations, Telecom Egypt managed to reduce its net debt/EBITDA ratio on an annualized basis to 1.2x, compared to 1.4x in FY 2022. The company maintained its hard currency debt at a nearly constant level quarter-on-quarter.
Mohamed Nasr, managing director and chief executive officer of Telecom Egypt, expressed his satisfaction with the exceptional results achieved in Q1 2023. He highlighted the company's dedication to becoming a leading ICT provider and emphasized how the results demonstrate Telecom Egypt's strengths and its ability to leverage its diverse portfolio of assets and strategic location.
