- April 10, 2018
- Posted by: Adrian Hall
- Category: More Africa News
Telecom Egypt has announced a decision by its board of directors to reduce its proposed dividend for FY 2017 to EGP 0.25 from the EGP 1 per share it offered to investors.
At the announcement of its financial results earlier this year, the company said the decision is based on its plan to pursue an investment opportunity in the submarine cable industry.
Ahmed El Beheiry, Telecom Egypt’s Managing Director and CEO confirmed the funds raised from a cut of the dividend will be dedicated to the submarine cable as it is expected to maximise the company’s returns from the cable business and ensure the continuation of the current revenue stream.
“The amendment of the dividend proposal for FY 2017 is intended to avail short-term financing to an investment opportunity that Telecom Egypt believes is crucial for the continuation of the revenue stream of its cable business and comes in line with our prudent cash flow management. The company intends to maintain its long-standing dividend policy to its shareholders in FY 2018 and beyond. Such dividend policy aims to provide investors with a continuous stream of annual dividends, while balancing dividend distribution and the reinvestment of its cash flows in its Capex program, which is viewed as the key driver for inducing future growth.”
El Beheiry added that further disclosure on the submarine project, including its exact location as well as full list of investors, will be made once the commercial arrangements have been concluded.
Telecom Egypt is currently an investor, along with Alcatel-Lucent, in the US$125 million TE North submarine cable network linking Sidi Kerir in Egypt to Marseille in France since 2008.
TE North extends over 3,100 km with capacity of 128 x 10 Gbits/sec on eight fibre pairs.
On their upcoming investment, the TE board of directors confirmed in a media statement that the decision to amend the dividends’ proposal comes in a bid to preserve the revenue stream of the cable systems’ segment by “availing short-term financing to the potential investment opportunity without inflating the company’s debt position and achieve(ing) a short-term return on the potential investment opportunity.”
In its financial results for 2017 released last month, Telecom Egypt revealed that its in-service CapEx, including license fees for FY17, amounted to EGP 10.7bn compared to 10.0bn last year and cash CapEx reached 7.5bn compared to 8.6bn in FY16.
The financial reports also showed that the total number of fixed broadband customers grew 20% y-o-y to reach 4.1m and fixed voice customers reached 7.1m in FY17 up 11% y-o-y. Mobile customers on the other hand closed the year at 2.3 million.
In January, the telco announced approval by its Board of Directors of a budget for the 2018 financial year which anticipates growth in revenue amongst other positive developments. Key highlights of the 2018 Telecom Egypt budget for this year include a forecast of total revenue growth in the range of ‘high single digit to low double digit’ as well as EBITDA margin in the mid-to-high twenties and CAPEX to sales ratio of 30%. The dividend that was initially proposed was in line with the payout for the 2016 financial year.
In a separate development in the Egyptian cable industry a few weeks ago, local Egyptian ICT firm HitekNOFAL announced its collaboration with Chinese fibre optic specialists Hengtong Group to construct a new optical fibre cable factory in Badr, as part of a three-year US$30 million project.
Source; IT Web Africa