Abu Dhabi’s Etisalat plans Dh7.5bn share buyback

Telecom operator says it intends to purchase up to 5 per cent of the firm’s paid-up capital

Etisalat has announced plans to buy back shares worth Dh7.5bn from the market. Its stocks climbed on Tuesday. Fatima Al Marzooqi / The National

Etisalat, the UAE’s biggest telecoms operator by market capitalisation, plans to buy back 7.5 billion dirhams worth of shares from the market. The company's share price climbed following the announcement on Tuesday.

The board of Emirates Telecommunications Group, or Etisalat, has given a nod to “circulation share buy-back programme,” through which it intends to purchase up to 5 per cent of the firm’s paid-up capital, or 434.8 million shares, the telecommunications company said in a regulatory filing to Abu Dhabi Securities Exchange, where its shares are traded. The decision to buy back stocks is subject to the approval of the UAE’s capital markets regulator, Securities and Commodities Authority, and the company's shareholders who are scheduled to meet on March 21, it said.

Etisalat may cancel or resell the bought back stocks, it said without giving further details on the term of the planned transaction. The company has a market capitalisation of 151bn, and based on Monday’s closing share price, the 5 per cent buyback will be valued at 7.5bn.

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"Buying back shares is a way of rewarding sharesholders by pushing the share prices up and that’s a positive," said Sanyalaksna Manibhandu, the head of research at FAB Securities. "They [Etisalat] have been hinting at it for some time and now it is concrete. They have put down maximum of 5 per cent [of buyback] but market will be eagerly waiting for the price range [for the planned deal]."

The company’s shares rose as much as 4.1 per cent, the most in more than a year. It was the top stock in terms of traded value, ending the day 2.6 per cent higher at Dh17.75 a share. Abu Dhabi’s benchmark index fell 1.9 per cent.

Etisalat competes with Dubai-based du in the domestic market and has lost some ground to the incumbent in the recent years. Last month, Abu Dhabi-headquartered Etisalat reported Dh8.4bn in full-year 2017 net profit attributable to shareholders, a 0.3 per cent increase on the previous year. Its fourth-quarter net income, however fell 12 per cent to Dh2bn, according to calculations made by Reuters, in the absence of a quarterly breakdown.

The company, which last year deployed pre-commercial 5G network in certain locations in UAE, also said its subscriber base in the domestic market grew to 12.6 million in the fourth quarter of 2017, a 3 per cent increase from the same period in 2016. The company operates in 16 countries across the Middle East, Asia and Africa.