Serious governance questions raised wannabe 4G provider Telecom Egypt. Egypt’s Government Accountability Office (GAO) issued a largely negative qualified report after a limited scope audit of Telecom Egypt (TE) on both its standalone and consolidated financials. On the consolidated financials, the GAO’s qualified opinion came with a number of issues it said TE should fix before the full audit. The GAO said TE failed to provide it access and data it needed for its audits and didn’t make available its ratified AGM reports. It also said it had questions regarding how financials were consolidated as it did not receive the subsidiaries’ financials, and could thus not ascertain the numbers.

The state auditor also wants to see feasibility studies for projects TE flagged as the basis for a capital increase three years ago — and for which it appears to have used only a third of the capital it raised. GAO also flagged that it could not ascertain EGP 988 mn in revenues generated from business lines including TE’s cables and interconnection services. Also among the points raised in the consolidated financials limited scope audit was what the GAO sees as TE’s inadequate provisioning in a number of issues including major court disputes.

TE, the landline monopolist, is a publicly traded, taxpayer-owned company with international shareholders that has recently decided to increase its borrowing to enter into the cut-throat market of mobile telephony.