November 13, 2011 / 9:04 PM / in 7 years

Orascom Telecom swings to Q3 net loss

CAIRO (Reuters) - Currency effects helped push Orascom Telecom to a net loss of $975,000 for the third quarter from a profit of $939 million a year earlier, the company said on Sunday.

Earnings before interest, tax, depreciation and amortization grew 21 percent to $481 million as revenues climbed 3.5 percent to $1.01 billion, the company said in a statement on its website.

Net income before minorities was $10 million, down from $934 million in the third quarter of 2010, which included a gain from the payment of a settlement deal and accounting adjustments at its Egyptian unit Mobinil.

Russia’s Vimpelcom bought Egypt-based Orascom’s parent company, Wind Telecom, in April in a deal worth more than $6 billion that created one of the world’s biggest telecommunications companies in terms of subscribers.

But investors say persistent uncertainty over the future of Orascom’s Algerian unit Djezzy is still weighing on Orascom’s share price.

Orascom’s net loss after minorities undershot the $50.7 million profit forecast by Amr Hussein Alalfy, an analyst at CI Capital.

The company blamed part of net loss on a stronger Egyptian pound against the Canadian dollar, which led to a foreign exchange loss on a loan to its Canadian business.

Orascom’s subscriber base grew 12 percent to around 109 million, said the company, which is splitting its business in two under the terms of the tie-up with Vimpelcom.

Orascom’s lucrative Algerian business Djezzy, subject of a drawn-out ownership battle with the Algerian government, delivered annual subscriber growth of 9 percent, the company said.

Djezzy appears to be performing better than some analysts had expected after the Algerian government raised regulatory pressure on the company.

“The (Algerian) EBITDA margin remained stable as a result of careful cost management, which was put in place in order to mitigate the effects of the limitations the Algerian unit has been faced with,” Chief Executive Ahmed Abou Doma said.

He said the Egyptian market was still seeing “minor disruptions but remains resilient and highly competitive.”

Average revenue per user in Egypt, where Orascom’s unit Mobinil suffered a boycott by some subscribers, fell to $4.4 from $5.4 in the third quarter. In Algeria it rose to $9.9 from $9.6 a year earlier.

Reporting by Tom Pfeiffer; Editing by Diane Craft

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