Beltone Financial downgraded its rating on Egypt's Mobinil to "add" from "buy," to reflect the mobile network operator's exceptionally weak operational performance amidst escalating competition in the market. Mobinil, which is barely clinging on to its position as Egypt's largest network operator by subscribers, said it would not hit its full-year goals for subscriber numbers and revenue growth, and uncertain market and regulatory conditions would prevent it from updating its forecasts. "Due to the expected annual decline in revenues and the tightening margins, we expect net income to come under pressure, affecting the company's payout ratio, and its ability to distribute dividends, negatively," Beltone said. Beltone lowered its 2010 revenue forecast for the company by 8 percent to LE 10,462 million on expectations of a sharper annual decline in average revenue per user (ARPU) and lower subscriber net additions. Mobinil leads Egypt's competitive mobile market, which includes Vodafone Egypt, a unit of global player Vodafone Plc and Etisalat Egypt, a unit of Abu Dhabi-based Etisalat. If Vodafone continued to add subscribers at similar rates to those achieved in the previous three quarters, it is quite possible for Vodafone to become the market leader by number of subscribers, replacing Mobinil, if the latter's net subscriber additions did not rebound strongly in the third quarter, Beltone said. Mobinil added 26,000 new subscriptions in the second quarter, making a total of 26.15 million at the end of June. Vodafone's Egypt unit, added 1.2 million to 25.79 million.
