Telecom Egypt is pushing deeper into data centres and digital infrastructure after stronger earnings, cash generation and lower leverage gave the state-controlled operator greater financial room to pursue its five-year investment strategy.
Telecom Egypt reported a 47% year-on-year rise in net profit to EGP15.4bn in the first half of 2026, as higher data revenue and international traffic helped lift earnings faster than sales.
Revenue rose 17% to EGP59.2bn, while earnings before interest, tax, depreciation and amortisation increased 20% to EGP26.4bn. The EBITDA margin widened to 45% from 44%, while the net profit margin climbed five percentage points to 26%.
The improvement extended to cash generation and the balance sheet. Free cash flow to the firm rose 24.3% to EGP10bn, equivalent to 38% of EBITDA, while net debt to annualised EBITDA declined to 1.2 times from 1.6 times a year earlier.
The results give Telecom Egypt a stronger financial base as it seeks to expand beyond traditional connectivity into data centres and other digital infrastructure, alongside continued investment in fibre and 5G.
Data and international traffic drive growth
Data services were the principal driver of the top line, with revenue rising 26% year on year, while international incoming-call revenue increased 32%.
The latter benefited from an 18% increase in traffic, foreign-exchange gains and sustained connectivity demand, according to the company. Growth in data revenue reflected an expanding retail customer base as well as the initial effect of tariff adjustments approved by Egypt’s National Telecommunications Regulatory Authority.
Growth was also spread across Telecom Egypt’s principal businesses. Consumer revenue increased 24%, enterprise revenue rose 16%, domestic wholesale advanced 20% and international carrier services grew 26%.
The performance provides an early indication of progress under a five-year plan adopted at the end of 2025, through which Telecom Egypt is seeking both to improve returns from its existing networks and develop additional revenue sources.
The most significant new pillar is data centres.
Telecom Egypt retains data-centre exposure
Telecom Egypt’s board decided in July not to proceed with a proposed transaction with Helios Investments that would have transferred a 75-80% stake in a subsidiary owning the company’s Regional Data Hub.
The proposed transaction, announced in September 2025, valued 100% of the business at $230mn on a debt-free, cash-free basis, potentially rising to $260mn if agreed performance targets were achieved.
Telecom Egypt said the transaction did not proceed because certain conditions contained in the term sheet, including requirements involving third parties, had not been satisfied.
Rather than seek another exit from the business, the company is proceeding with plans to carve its data-centre assets and operations into a wholly owned subsidiary, positioning the activity as a seventh strategic revenue stream alongside its existing businesses.
The change in approach has an important capital-allocation consequence. By retaining full ownership, Telecom Egypt preserves more of any future upside from the data-centre operation, while also retaining the associated funding requirements and execution risk.
The company said the decision not to proceed with the Helios transaction would have no immediate financial or operational impact.
Telecom Egypt is seeking to use its domestic network and international subsea cable infrastructure as the foundation for expansion into higher-value digital services.
The company says it has more than 1,500 exchange sites across Egypt, providing a geographically dispersed infrastructure base that could support future digital facilities.
It also says its infrastructure carries more than 90% of international traffic transiting between Europe and Asia and between Europe and Africa, with transit capacity exceeding 330 terabits per second.
Telecom Egypt is betting that those assets, combined with Egypt’s position between three continents, can help it capture rising regional demand for data-centre capacity, cloud connectivity and other digital services.
Fibre, 5G and data centres raise the investment test
Data centres form only one part of the company’s investment programme.
Under its five-year plan, Telecom Egypt intends to accelerate fibre-to-the-home (FTTH) deployment and progressively migrate parts of its traditional copper fixed network towards fibre. It is also expanding the use of 5G to increase network capacity and support new consumer, enterprise and digital services.
Those ambitions make capital discipline increasingly important.
Telecom Egypt reported EGP4.9bn of in-service capital expenditure in the first half, equivalent to 8% of sales, while cash capex, including licence costs, reached EGP18.6bn.
The improvement in leverage provides some additional capacity. Net debt to annualised EBITDA fell to 1.2 times from 1.6 times a year earlier, while stronger free cash flow provides a larger internal source of funding.
But fibre, 5G and data centres are capital-intensive businesses. The central question for investors is therefore not simply whether Telecom Egypt can expand its digital infrastructure, but whether the additional investment can generate returns sufficient to justify the capital deployed.
From network scale to financial returns
The first-half figures provide a stronger starting point. Revenue growth of 17% translated into 20% EBITDA growth, a 47% increase in net profit and a 24.3% rise in free cash flow, alongside lower leverage.
That combination gives Telecom Egypt greater financial flexibility as it moves into a more investment-intensive phase of its strategy.
The company’s fixed network and international cable infrastructure provide the foundation for that expansion, but the financial outcome will depend on its ability to monetise those assets beyond conventional telecommunications services.
The decision to retain full ownership of the data-centre operation raises the stakes. Telecom Egypt will capture more of the returns if the business expands successfully, but it will also shoulder more of the investment burden.
Its first-half performance gives the company greater room to pursue that strategy. The longer-term test will be whether investment in data centres, fibre and 5G can turn Telecom Egypt’s network scale and international connectivity into sustained earnings, cash generation and adequate returns on capital.
The financial figures and operating drivers in the final version are verified against Telecom Egypt’s August 13 H1 results. The company specifically identifies 26% data-revenue growth and 32% international incoming-call growth as the principal top-line drivers, alongside 20% EBITDA growth, EGP10bn FCFF and the improvement in leverage to 1.2x. The Helios terms and subsequent decision to retain the business are also consistent with Telecom Egypt’s September 2025 and July 2026 disclosures.
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