      Revenues – EGP4,782mn, +14% Y-o-Y, -12% Q-o-Q
      EBITDA margin – 31.5%, -1.5pp Y-o-Y, +8.3pp Q-o-Q
      Net profit – EGP688mn, -49% Y-o-Y, vs. 4Q17 net loss of EGP396mn
 
TE’s 1Q18 bottom-line returned to net profit, posting EGP688mn for the quarter following net loss of EGP396mn in 4Q17 that was mainly driven by the Etisalat Misr and Orange Egypt dispute settlements, which had a combined negative impact of cEGP1,176mn on profit before taxes at the time. Compared to last year, earnings fell 49%, as depreciation and amortisation charges have risen sharply in 1Q18 as a result of the recognition impact of the mobile infrastructure and licence, as well as higher interest expenses due to mobile-related debts. Moreover, 1Q18 earnings were affected by a decline in contribution from Vodafone Egypt (VFE) to EGP287mn (-58% Y-o-Y, -49% Q-o-Q), but the company did not clarify what drove this decline. TE said that adjusting for a normalised profit from VFE, its net profit would have been EGP931mn that quarter.
 
At the operating level, revenues jumped 14% Y-o-Y to EGP4,782mn for the quarter, driven mainly by a 45% Y-o-Y surge in revenues from “Home & Consumer”, which the company attributed to growth in data revenues from both ADSL (fixed) and mobile broadband. This led to a 35% Y-o-Y hike in revenues from the retail division, where revenues from “Enterprise Solutions” also increased 13% Y-o-Y. Since the start of the new revenue-reporting structure in 2012, this is the first quarter retail revenues surpass wholesale revenues by a notable margin, reaching 51.3% of total revenues. On the wholesale side, revenues from most business units continued being largely stable Y-o-Y and Q-o-Q, with the exception of “International Customers & Networks” (this segment represents revenues from submarine cable systems), as the latter tends to be erratic depending on cable project deals signed; its revenues increased 18% Y-o-Y, but fell 61% Q-o-Q. As a result of total revenue growth, EBITDA stood at EGP1,506mn (+9% Y-o-Y, +19% Q-o-Q), implying an EBITDA margin of 31.5%, which was broadly unchanged from last year and increased 8.3pp from last quarter.
 
The company’s CEO said management is on track to meet the FY18 guidance; as a reminder, the guidance management mentioned last quarter is: i) revenue growth Y-o-Y: high single-digit to low double-digit; ii) EBITDA margin: mid to high 20s (under EAS); iii) capex to sales: 30-35%. 
 
TE’s BoD approved the acquisition of Middle East and North Africa Submarine Cable (MENA Cable) by a 50%-owned subsidiary, Egyptian International Submarine Cables Company, for a total enterprise value of USD90mn pending regulatory approvals. Moreover, the BoD approved a five-year USD500mn syndicated loan to refinance outstanding short-term USD-denominated debt, as well as to fund working capital; this is in addition to approving a four-year vendor-financing arrangement with Huawei for USD200mn with a grace period of 24 months.