Etisalat, the UAE’s biggest telecoms operator, reported an 11 per cent rise in first quarter net profit as its UAE mobile subscribers grew by a fifth to 8.9 million.
Etisalat, which has subsidiaries in 15 countries in the Middle East, Africa and Asia, reported a net income of Dh2 billion as subscribers across the group grew 3 per cent to 145 million.
“Earnings beat our estimate, led by strong domestic performance,” said Nishit Lakhotia, the head of research at Bahrain-based Sico investment bank. “The UAE contributes 66 per cent of Etisalat’s revenue and we believe higher mobile revenues, including data, led to strong growth in the top line and high earnings-before-deductions margins.”
The results exceeded the average forecast of three analysts, which expected Etisalat to report a net profit of Dh1.8bn during the quarter. Revenue for the period was Dh9.9bn, an increase of 3 per cent over the same period a year ago. Etisalat paid a royalty fee to the Government of Dh1.9bn, a year-on-year increase of 4 per cent.
Etisalat deployed high-speed mobile data communication, known as LTE, during the first quarter. It also said that mobile data would remain a key focus for the company this year.
Telecoms operators such as Etisalat are facing pressure on the voice side of their business as Skype and Viber continue to increase in popularity. But mobile and fixed data revenues have helped to drive earnings growth.
The phone company attributed the increase in its subscriber base to gaining customers in UAE, Egypt, Nigeria and Niger.
Matthew Reed, a principal analyst at Informa Telecoms and Media in Dubai, said: “Etisalat seems to be benefiting from the strengthening UAE economy and the continued growth in demand for data services in the UAE. Revenues in the UAE were up 8 per cent year-on-year. But less happily, revenues from Etisalat’s international consolidated operations were down by 3 per cent year-on-year.”
On Etisalat’s international strategy, the company’s chief executive said that it would continue to expand its geographic footprint to diversify its revenue stream.
“Africa remains a strategic region for our business and we will continue to invest and build even closer relationships with the communities in which we operate in the continent,” said Ahmad Abdulkarim Julfar.
Etisalat operates in a number of African countries, including Sudan, Nigeria and Tanzania. Africa contributes only 7 per cent of the group’s revenue. Egypt contributes 12 per cent and Asia’s share is 15 per cent of the overall profits.
Etisalat benefited from an increase in smartphone usage In Egypt. It reported a 1 per cent increase in revenue to Dh1.5bn. Meanwhile in Asia, Etisalat had strong competition in its Afghanistan operations. It reported revenue of Dh1.5bn, a decrease of 7 per cent compared to the same period last year.
Etisalat’s latest acquisition of a 53 per cent stake in Maroc Telecom is expected to close by the end of May. The deal is subject to regulatory approvals in Morocco.
An Abu Dhabi state-owned fund is financing a quarter of Etisalat’s €4.2bn (Dh21.34bn) purchase of Vivendi’s stake in Maroc Telecom, Reuters reported yesterday.
selgazzar@thenational.ae
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