The Egyptian Company for Mobile Services -ECMS (EMOB.CA) released its financial year 2000 unaudited results ending December 31,2000. Net income surged 105 percent to LE289.1 million compared to LE141 million in FY99. Revenues edged up 41 percent to LE2,117 million, compared to LE1,501 million.
Lower cost of service and operating expenses to revenue were the most influential items that made ECMS surpass our expectations of LE27.2 million. Cost of Service/Revenues steeped down to 17 percent compared to 22.5 percent in FY99. Moreover, operating expenses to revenues dropped to 39.5 percent from 41.7 percent in the previous fiscal year. Consequently, earnings before income tax, depreciation, and amortization (EBITDA) margin increased to 44 percent in FY2000 from 36 percent in FY99. Interest expense was lower than expected. Until quarter 3 FY2000, the amount of interest calculated was LE195 million, while interest income was LE25.5 million. However, by the end of the year, interest was just LE112 million. The reason behind the lower interest expense was the capitalization of a tranche of its interest to be amortized in the following years when tax benefits can be derived.
ECMS's subscriber base grew in the 4th quarter of FY2000 by approximately 188,000 subs, an 18.4 percent growth bringing the total to around 1,210,000 subscribers from 1,022,000 at the end of September 2000. Over the entire year, subscribers grew more than 135 percent.
Accordingly, Average Revenue per User (ARPU) has dropped from LE373 in FY99 to LE204.7 FY2000, translated to $51.2. On a more positive note, ECMS has provisioned against currency losses on the basis of LE3.95 per dollar. This move will lower any concerns of forwarded losses. Quarter-on-quarter, net income for 4Q FY2000 amounted to LE114.7 million, 45.2 percent higher than 3Q2000’s net income of LE78.99 million.
Revenues edged up 5.5 percent to LE580.1 million compared to LE549.8 million of 3Q2000. The 4Q increase in revenues was backed by the diverse services ECMS provides such as ALO, ALO Taksit (installments) and ALO Wasahlan, which is a limited duration prepaid card. Moreover, higher SMS and data transmission via mobile phones supported the growth. Other services ECMS provided during the quarter included its Moga Visa card.
EV/EBITDA to growth (EEG) multiple for 2001 for around 20 companies from Europe, Asia and Latin
America, concluding a value of LE109 per share. Today’s results were factored into our assumptions for ECMS and prompt us to continue our Strong Buy recommendation.
Prime Securities S.A.E.
© 2001 Mena Report (www.menareport.com)
