Etisalat achieved net profit of Dh1.45 billion in the three months to December 31, 2013, according to Reuters calculations. Ryan Carter / The National
Etisalat achieved net profit of Dh1.45 billion in the three months to December 31, 2013, according to Reuters calculations. Ryan Carter / The National

Business

Etisalat profit leaps 70 per cent

Etisalat 2013 profits were at Dh7.08 billion as demand for data surged. However, international operations face pressures.

Shereen El Gazzar

March 04, 2014

Etisalat, the country's biggest telecoms company, has recorded a 70 per cent leap in fourth-quarter profit.

The company achieved net profit of Dh1.45 billion in the three months to December 31, according to Reuters calculations.

Full-year profits reached Dh7.08bn compared with Dh6.74bn a year earlier.

“Etisalat’s revenues rose from Dh32.95bn in 2012 to Dh38.85bn in 2013, but more than half of that increase was due to the consolidation of Etisalat’s operation in Pakistan – that is to say the Pakistan unit was included in the 2013 results, but not in 2012,” said Matthew Reed, an analyst at Informa Telecoms and Media in Dubai.

“One clear, positive development is that Etisalat’s revenues in the UAE rose from Dh23.89bn in 2012 to Dh25.96bn in 2013, probably due quite largely to the improving economic conditions in the country.”

Etisalat, which had previously focused on international expansion, is now concentrating on developing its domestic market, where a boom in smartphone handset sales is helping to drive revenue growth.

Etisalat has faced some challenges in international markets such as Egypt, where a weakening currency has hit revenues. The company’s operations in Tanzania and Sri Lanka are also facing competitive pressures. Etisalat operates in 15 markets. Reuters said Etisalat’s Dh20bn deal to buy Vivendi’s 53 per cent stake in Maroc Telecom is expected to be completed by the end of May and is currently awaiting regulatory approval from the countries in which Maroc operates.

Etisalat’s local rival, du, has reported a net profit after royalities of Dh1.99bn for 2013.

The recent introduction of the mobile number portability (MNP) service, which allows users to switch between Etisalat and du while keeping the same phone number, led to the transfer of 23,000 numbers between the two firms, the Telecommunications Regulatory Authority said last month.

* With Reuters

selgazzar@thenational.ae

Follow us on Twitter @Ind_Insights

PROFILE OF SWVL

Started: April 2017

Founders: Mostafa Kandil, Ahmed Sabbah and Mahmoud Nouh

Based: Cairo, Egypt

Sector: transport

Size: 450 employees

Investment: approximately $80 million

Investors include: Dubai’s Beco Capital, US’s Endeavor Catalyst, China’s MSA, Egypt’s Sawari Ventures, Sweden’s Vostok New Ventures, Property Finder CEO Michael Lahyani

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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Engine: Dual 180kW and 300kW front and rear motors

Power: 480kW

Torque: 850Nm

Transmission: Single-speed automatic

Price: From Dh359,900 ($98,000)

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