Egypt’s Orascom Telecom swung to a net profit of $106 million for the third quarter, compared with a net loss of $1.5 million in the same period last year, after foreign exchange gains boosted its earnings.
Performance was aided by a 7.6% reduction in capital expenditure as Orascom (Cairo, Egypt) slowed the pace of network expansion in Bangladesh and Pakistan.
But the operator, which merged with Russia’s VimpelCom (Amsterdam, Netherlands) last year, also blamed currency movements for a 4.4% drop in dollar-denominated revenues, to $885 million.
Revenues from Djezzy, its mobile-phone unit in Algeria, were up by 2% in local currency terms but down 8% in US dollars, while sales in Pakistan rose 4% in rupees but fell 4% when converted.
Orascom claims overall organic revenue growth in local currency terms of 6%, driven by a 13.7% increase in subscriber numbers to 85 million.
“Growth in consolidated revenues resulted from strong subscriber growth and an increase in data and VAS uptake in our main subsidiaries, namely in Algeria, Pakistan and Bangladesh,” said Abou Ahmed Doma, Orascom’s chief executive officer, in a statement. “EBITDA increased as a result of this growth and cost savings in our major subsidiaries.”
In dollar terms, Orascom’s earnings before interest, tax, depreciation and amortisation (EBITDA) came in at $425 million, down 5.1% on EBITDA for the third quarter of 2011.
Despite the company’s optimism about operational performance, average revenue per user (ARPU) fell in both local currency terms and dollars in Algeria and Pakistan, Orascom’s two biggest markets.
The operator blamed the impact of Ramadan and a rise in the number of customers with more than one SIM card for a 6.5% drop in Algerian ARPU, to 668.3 dinars ($8.3) a month.
In Pakistan, performance was hit by the government-ordered shutdown of all cellular networks for two days at the end of Ramadan due to security concerns, and by flooding in the southern and central regions of the country. Monthly ARPU fell to 230.6 rupees ($2.4) between the third quarters of 2011 and 2012.
Even so, increased profitability has allowed Orascom to reduce net debt by 1% in the first nine months of 2012, to $2.98 billion, leaving it with a healthy net-debt-to-EBITDA ratio of about 1.9.
Earlier this week, Orascom announced it had set up a company to manage negotiations with the Algerian government over its 51% stake in Djezzy. An ownership dispute between the two parties has dragged on for more than two years.
The operator also received shareholder approval this week of its plan to take control of Globalive Investment Holding Corp, the parent company of Canadian mobile-phone operator Wind Mobile.
Orascom may be looking to simplify Wind Mobile’s ownership structure in preparation for a merger with Mobilicity, a smaller Canadian rival, according to many analysts.