Telecom Egypt struggles as landline exodus continues

The global exodus away from landlines to the mobile phone industry has finally arrived in full force in Egypt, as Telecom Egypt, the country’s state-owned fixed line operator reported massive 15 percent drops in revenue for the second quarter. Analysts and company officials said that as Egyptians move more mobile, the fixed line operator will struggle to grow.

“What we are witnessing is the future of the telecom sector in Egypt and while right now it looks bad for us, we believe that Telecom Egypt knows where to go in the near future,” said company executive Omar Ismail. He added that the company is looking to boost its efforts to garner Egypt’s fourth mobile license early next year.

“This will help us push forward into the overall economy of Egypt,” he continued, “but we can’t discount landlines just yet in the country as there are still a lot of people that use them.”

Late last week, brokerage firm Nomura announced it was lowering its share-price target for the company to 18 Egyptian pounds from 19.9 pounds as a result of the quarter earnings.

The company also cited theft of infrastructure as a major impetus to the company’s growth.

“Voice revenues declined owing to large number of customer disconnections (net 300,000 lines disconnected in the second quarter owing to mobile substitution), and loss of service to 750,000 customers for a period of 10 days owing to theft of copper cable,” Nomura said.