Shares of Etisalat and Emirates Integrated Telecommunications Company, also known as du, jumped more than 14 per cent after the telecommunications operators said they are considering an increase in the foreign ownership limit in their stocks.
Etisalat, the biggest telecoms company in the UAE, soared 14.9 per cent to Dh20.80 per share at close on Tuesday, boosting the Abu Dhabi Securities Exchange general index by 3.14 per cent.
Du's shares surged 14.6 per cent to Dh6.69, lifting the Dubai Financial Market General Index by 1 per cent.
Du's board will meet on January 20 "to consider the increase in the ownership percentage of non-UAE citizens in the company's shares", it said in a regulatory filing.
Etisalat's board is also meeting on the same day to consider an increase in foreign ownership limit in its shares, it said in a separate bourse filing to the ADX.
Industry analysts said the move will “yield a good outcome” and is in line with the UAE’s "efforts to attract fresh investment into the economy”.
It is "a big positive for both the companies and the UAE telecom sector in general as it will attract not only monetary capital but also other non-monetary advantages like technology transfer and human capital base", Vijay Valecha, chief investment officer at Century Financial, told The National.
Announcements by the two telecoms operators follow the UAE's commitment to allow foreigners to own 100 per cent of business across industries, Mr Valecha said.
“Etisalat and du had first opened up for foreign ownership in 2015 with a 20 per cent limit cap … the move is likely to give both these stocks deeper market access and liquidity flows,” he added.
Both Etisalat and du performed strongly last year with gains of 8 per cent and 10.56 per cent, respectively, Mr Valecha said.
"Opening the market to foreign owners is [a welcome move] and the fact is that Etisalat is a major network provider, the strongest one ... hence, we believe the company's strategy is likely to yield a good outcome," Naeem Aslam, chief market analyst at brokerage Avatrade, told The National.
With its headquarters in Abu Dhabi, Etisalat was established over four decades ago in the UAE as the country’s first telecommunications service provider. It offers services to 149 million subscribers in 16 countries across the Middle East, Asia and Africa.
Sixty per cent of the company is owned by Emirates Investment Authority, while the remaining is floated on the ADX with the current foreign ownership limit fixed at 20 per cent of the share capital, according to the telco's website.
In October, it reported a 6 per cent year-on-year rise in third quarter net profit to Dh2.4 billion and a 0.5 per cent rise in revenues to Dh13bn.
Founded in 2005 as the UAE’s second licensed telecommunications provider, EITC is 50.12 per cent owned by EIA, 10.06 per cent by Mubadala and 19.7 per cent by Emirates International Telecommunications, with the public owning remaining shares.
Its net profit for the three months to the end of September 30 surged to Dh824m.
Several banks in the UAE, the second biggest Arab economy, have increased foreign ownership caps on their stocks to attract more external investors after the country eased its foreign ownership limit restrictions.
In June, Commercial Bank of Dubai, which counts Investment Corporation of Dubai as its biggest shareholder, set a foreign ownership limit of 40 per cent of its stocks. In March, Dubai Islamic Bank's shareholders also approved an increase of its limits to 40 per cent from the previous 25 per cent.
First Abu Dhabi Bank, the biggest lender in the country, Emirates NBD and Abu Dhabi Islamic Bank have also sought shareholder approval to lift their caps on foreign ownership.