4Q15 results highlights: i) Revenue – EGP3,465 mn, +15% Y-o-Y, +18% Q-o-Q, +2% vs. EFGe; ii) EBITDA margin – 30.9%, +9.1pp Y-o-Y, +3.9pp Q-o-Q, -1.5pp vs. EFGe; iii) net income – EGP863mn, +265% Y-o-Y, -28% Q-o-Q, +1% vs. EFGe; iv) dividend – EGP0.45/share, -20% Y-o-Y, -10% vs. EFGe.   TE’s 4Q2015 earnings under the Egyptian Accounting Standards (EAS) came in at EGP863 million, up more than twofold Y-o-Y but down 28% Q-o-Q, and exactly in line with our estimate. The Q-o-Q decline in earnings was mainly due to the retroactive change in corporate tax rates for 9M2015 from 30% to 22.5%, causing the company to reverse a deferred tax liability of EGP663 million in 3Q2015. Moreover, earnings were further boosted by a strong contribution from VFE (+68% Y-o-Y, +26% Q-o-Q).   The dividend was disappointing to us, as TE announced a DPS of EGP0.45 for the year versus last year’s EGP0.56 and short of our conservative estimate of EGP0.50. This is despite a clear statement from management – in the 3Q2015 conference call – that TE was close to reaching an agreement with Vodafone Egypt (VFE) during 4Q2015 that would have allow TE to increase its DPS. It is likely that negotiations were not completed in time or not completed at all, in our view. While the announced DPS represents a yield of 6.6%, we think the dividend cut is likely to send a negative message to the market as it is the third annual dividend cut in a row. Hence, the stock may remain under pressure for some time, but we reiterate our Buy rating as we think valuations are undemanding at the current level.   Top-line also came in line with our estimate at EGP3,465 million, up 15% Y-o-Y and 18% Q-o-Q due to strong growth across all business units (except for the International Carriers Affairs). Retail revenue was strong owing to impressive growth in the Enterprise Solutions business unit, which was driven by strong demand in data services particularly from the banking sector and governmental institutions. The same is true for the Domestic Wholesale business unit which benefited from strong demand for infrastructure and backhauling services from local telecom operators. Revenue from the cable systems (International Customers & Networks, IC&N) missed our estimate by a third despite a strong performance Y-o-Y and Q-o-Q that was probably boosted by one-off capacity sales, we believe. Our 4Q2015 forecast for this segment was EGP531 million in revenue based on previous guidance from management that IC&N revenue for the year would amount to about EGP1 billion. EBITDA margin expanded on a more favourable revenue mix towards higher-margin revenue streams, particularly the IC&N segment, we suspect. (Omar Maher, company)