Profits at Egypt's largest mobile phone operator, Mobinil, have fallen over the past three months despite strong growth in customer numbers, as the

company struggles to keep

down costs.

Mobinil's net profit for the three months to the end of September was£E 472.2 million ($85.5 million), down from£E 516 million ($93.5 million) for the same period in 2006.

The company's rate of signing up customers accelerated

over the quarter, with an additional 1.8 million customers taking its total number to

13.7 million.

Chief executive officer Alex Shalaby's prediction in July that the company would have 15 million customers by the end of the year now looks cautious.

However, while Mobinil is signing up more customers and increasing its sales, its costs are rising more quickly.

Its revenues were up 29 per cent on the third quarter of 2006, from $312.4 million to $404.3 million. However, operating expenses rose by 84 per cent to $137.2 million from $74.5 million .

Much of the increases have come from offering new tariffs for mobile services, which have lowered the costs for customers.

'We have reduced the minimum monthly spend,' says Guillaume van Gaver, vice-president of Mobinil. 'It was extremely high in 2005 and 2006. The price drop was more than compensated for by the users' urge to use their mobile phones more.'