Mobinil tightens its belt

10 February 2003
The Egyptian Company for Mobile Services (Mobinil) is reining in its marketing drive for new customers for its GSM network, after a year in which devaluation of the local currency continued to put pressure on the company's dollar-denominated debt exposure. Mobinil enjoyed a 24 per cent rise in net profits for the year ending 31 December 2002, but the£E 422 million ($78 million) figure was significantly below forecasts of about£E 500 million ($93 million). The company has also announced that it has taken a£E 40 million ($7.4 million) foreign exchange loss from the flotation of the currency in January.

'Our main strategy has been to focus on value-led growth and to have a special focus on reducing our exposure to foreign currency, regarding the structure of debt,' Osman Sultan, Mobinil's chief executive, said on 5 February. 'We recognise there is potential in the market but we should be addressing this potential very carefully.' In the last year, the company succeeded in restructuring its debt profile to reduce its foreign currency exposure to $38.5 million from $94 million, he said.

In order to maximise revenues from its GSM operations, the company may introduce a more flexible pricing structure for its GSM services, which at present have a minimum charge of £E 1.75 ($0.32) for all calls lasting less than a minute. In common with the other incumbent GSM operator, Vodafone Egypt, Mobinil is also understood to be in discussions with the telecoms regulator to discuss possible adjustments to tariffs following the flotation of the Egyptian pound. The two operators, which have more than 4 million subscribers between them, will face further competition in the local market when Telecom Egyptlaunches its own GSM services in the fourth quarter.

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