CAIRO: Egypt s Orascom Telecom posted a fourth quarter net loss of $46.4 million, the company said Monday, citing rioting and hostility in Algeria, one of its main markets, for the sharp decline.
The recent riot events in Algeria following the football match had a negative impact on the operations, the Cairo-based regional operator said in its results statement.
The Algerian unit, Djezzy, had its headquarters and dozens of shops in the Algerian capital ransacked in November by crowds angry about minor violence surrounding a soccer World Cup qualifying match between Algeria and Egypt.
Djezzy lost around $55 million from loss of revenue, stock damage and tax provision, plus around $41 million due to property damage in the quarter, Orascom said.
The firm, the largest Arab mobile operator by subscribers, said it had revenue of $1.296 billion and EBITDA of $496 million.
Revenue and EBITDA came in line with our expectations, but the bottom line was lower, due to the higher than expected negative impact of events in Algeria, said Sally Gerges, a telecom analyst at Beltone Financial.
Orascom had just under 93 million subscribers by the end of December, compared with 88.9 million by end-September.
A Reuters poll of seven analysts had forecast fourth-quarter net profit at an average of $102 million, down sharply from $181 million in the previous quarter, but still higher than a year ago. A number of those analysts cited the Algerian tax dispute for their lower forecasts.
Orascom paid around $110 million in December for the right to appeal a $597 million tax bill Algeria says the firm owes for 2005-2007. Orascom says it was tax exempt. It has since paid another $110 million to continue the appeal process, which it expects will last another 12 months.
Algerian sources told Reuters last month the government wanted Orascom to leave the country. Algeria s finance minister said later the government treated all telecom firms equally and only wanted its taxes paid.
Orascom s executive chairman said in the results statement that the company wants to stay in Algeria, but will assess its options.
We are keen to stay in Algeria; it is one of our main assets and until this incident we were very happy there, Naguib Sawiris said. However, we need to understand if our investment is welcome there or not. If not, we will consider other options.
Djezzy provided more than one third of Orascom s revenues in 2009.
The company, majority-owned by Weather Investments, runs operations from North Africa to North Korea. It shares control of Egypt s Mobinil with France Telecom, but has controlling stakes in almost all its other ventures.
A change in Pakistani tax law meant a minimum of 0.5 percent of revenue was paid in the fourth quarter.
In North Korea, where the firm s koryolink unit launched in December 2008, the firm had 91,700 subscribers and average revenue per user of $24.50 a month.
Canada s Globalive, in which Orascom has a 65 percent indirect equity stake and which is backed by a $700 million Orascom loan, launched in December 2009 and had close to 5,000 subscribers by the end of the month.
The quarterly loss pared Orascom s full year profit to $318 million, compared with $431 million in 2008.