Ex­change rate, MENA-SCS drive Oras­com Tele­com to prof­itabil­ity in 2016

Bel­tone Fi­nan­cial records neg­a­tive op­er­at­ing profit

The Daily News Egypt - - Business | Stock Market -

Oras­com Tele­com, Me­dia, and Tech­nol­ogy achieved a net profit of EGP 897.5m in 2016,in con­trast to a loss of EGP 3.6bn in 2015,driven by the flota­tion of the pound and the Mid­dle East and North Africa Sub­ma­rine Ca­ble Sys­tem (MENA-SCS).

Tele­coms an­a­lyst at Pharos Hold­ing for Fi­nan­cial In­vest­ments Mo­hamed Elmes­siry said that the flota­tion helped max­imise the rev­enues of the com­pany, where the prof­its of hard cash were valued at EGP 1.4bn, up from EGP 42.4m in 2015.

Most of the com­pany’s sec­tors re­alised a growth in prof­its in 2016, where the rev­enues of the real es­tate sec­tor reached EGP 12.6m, an in­crease of 57% year-on-year. Rev­enues of ca­ble op­er­a­tions amounted to EGP 31m, with a growth of 121%. Fi­nan­cial ser­vices rev­enues jumped to EGP 35m, up 183%. MENA-SCS rev­enues reached EGP 119m, up by 105%.

Elmes­siry said that op­er­a­tional prof­its are still on the neg­a­tive side due to the fail­ure of the in­crease in to­tal rev­enues to ex­ceed the in­crease in costs.Op­er­at­ing prof­its suf­fered a loss of EGP 43m in the fourth quar­ter of 2016.He ex­plained that the ex­penses of Bel­tone Fi­nan­cial drove op­er­at­ing prof­its to the neg­a­tive range.

Rev­enue rose to 84.7% in the pre­vi­ous year to reach EGP 538.4m com­pared to EGP 291.4m in 2015. Rev­enues jumped to EGP 885m, com­pared to a net loss of EGP 550m and EGP 47m in the fourth quar­ter of 2015 and the third quar­ter of 2016 re­spec­tively.

Elmes­siry said that Oras­com’s net in­come was sup­ported by for­eign ex­change gains.As­sum­ing no ex­change rate gains, the com­pany’s rev­enues would have recorded a loss of EGP 369m.

It is worth men­tion­ing that the board of di­rec­tors of Oras­com Tele­com and Me­dia has pro­posed a cash div­i­dend of EGP 0.10 per share at a rate of 59% and a re­turn of 13.7% to the cur­rent mar­ket price. Elmes­siry noted that there are con­cerns about the con­tin­ued de­cline in op­er­at­ing per­for­mance on the as­sump­tion of non-re­cur­ring in­come and the sale of MENA-SCS, which is a key engine for im­prov­ing per­for­mance. Pharos Hold­ing Re­search Cen­ter rec­om­mended buy­ing the stock. It set a fair value per share of EGP 0.94,up by 28.8% from the cur­rent trade price of EGP 0.73.


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