Etisalat's third quarter net profit drops 4% on higher expenses

The UAE's biggest telecom operator, though, beats analysts' estimates

Etisalat's net profit rose to Dh2.3bn in the third quarter to September. Pawan Singh / The National 

Etisalat said on Thursday its third-quarter net profit dropped 4 per cent as expenses and expenditure rose, but UAE's biggest telecom operator still beat analysts' estimates.

Net profit attributable to equity holders fell to Dh2.28 billion in the three months to September 30, the company said in a statement to the Abu Dhabi Securities Exchange, where it shares are listed.

The earnings, though, beat the Dh2.18bn median estimate of two analysts polled by Bloomberg.

Operating expenses rose 6 per cent to Dh8.5bn, while capital expenditure grew 3 per cent to Dh1.6bn during the period.

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Revenue grew 2 per cent to Dh13.14bn during the period.

Etisalat, which had a monopoly in the UAE until Du entered the market in 2007, exited from its Nigeria operations last year. The company, which owns and operates subsidiaries in the Middle East, Africa and Asia, said it signed an agreement with Telecom Egypt to provide the first voice services over an LTE network in the country.

Last week, rival Du said it would start offering eSim services in the new iPhone models, becoming the first UAE mobile provider to make physical sim cards obsolete. Both operators are set to introduce limited 5G services, the ultra-high speed mobile broadband, in the first quarter 2019.

Etisalat’s nine-month consolidated net profit after federal royalty till September 30, amounted to Dh6.6bn, an increase of 2 per cent compared to same period last year.

Its third-quarter global subscriber base of 144 million increased 3 per cent over the same period a year earlier, but remained unchanged since the second quarter. Etisalat also successfully completed the sale of its shareholding in Thuraya for $37 million (Dh137m) during this period.

Etisalat was granted approval from the Securities and Commodities Authority for its share buyback programme in late September.

EFG-Hermes expressed optimism over the results.

“Overall a reassuring set of numbers … the UAE’s performance remains solid, which is important given it is the largest contributor to the group’s numbers. The second largest, Maroc Telecom, has also done very well,” said Omar Maher, vice president of telecoms at EFG-Hermes.

“We saw a bit of a positive surprise at the level of the Egyptian unit, with impressive growth of 18 per cent year-over-year,” stated Mr Maher, adding, “While the stock’s valuations are rather fair at the current levels, it could see some positive momentum from the upcoming share buyback program.”