Egypt-based Orascom Telecom has reported a 32 percent year-on-year decline in net profit due to start-up costs at its new Canadian operations and ongoing problems in Algeria, its largest market. Net profit for the first quarter came in at US$49 million, while revenues rose 1.6 percent to US$1.2 billion. According to Dow Jones Newswires, the results were well below analysts’ forecasts. Cairo-based investment bank Beltone Financial expected net profit to increase 48.2 percent to US$105 million. Its subscriber base reached almost 96 million, up 19 percent from a year ago. “For the first quarter of the year 2010, our main focus was to counter the increasing competition in most of our operating markets by pushing increases in our subscriber bases, while striving to keep up with high levels of market growth,” said CEO Khaled Bishara in a statement.

While the firm has recently resolved its long-running dispute with France Telecom over ownership of Egyptian operator MobiNil, problems continued at Algeria, a market where Orascom has been hit with a US$600 million tax bill and civil unrest. “Despite growth in subscribers of Djezzy, our Algerian subsidiary was hit by the remnants of last quarter’s riot events, as well as the introduction of a new 5 percent sales tax on mobile recharges, which led to a decreased YoY performance,” Bishara said. Algerian subscriber growth rose 5 percent to almost 15 million year-on-year but was outperformed by the firm’s other markets. Customers grew by 31 percent in Bangladesh, 26 percent in Tunisia and 23 percent in Egypt. Orascom is currently understood to be in talks with South Africa’s MTN over the disposal of many of its African assets, though the Algerian regulator is currently blocking the sale of the Algerian unit. Click here to read our latest analysis on the deal.