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UAE’s Etisalat Q3 Net Profit Rises 22%

Almost half of Etisalat's third-quarter revenue came from its international operations.

Abu Dhabi-listed Etisalat reported a 22 per cent rise in third-quarter net profit on Wednesday as rising domestic income, lower taxes and the firm’s takeover of Maroc Telecom bolstered its bottom line.

The United Arab Emirates’ former telecommunications monopoly, which operates in 19 countries across the Middle East, Africa and Asia, made a net profit of Dhs2.22 billion ($598.97 million) in the three months to Sept. 30, it said.

This compares with a profit of Dhs1.83 billion in the year-earlier period.

Four analysts polled by Reuters had on average forecast Etisalat, the Gulf’s No.2 telecommunications operator by market value, would make a quarterly profit of Dhs2.65 billion.

Quarterly revenue was Dhs13.2 billion, up from Dhs9.59 billion a year earlier.

Domestic third-quarter revenue rose 10 per cent to Dhs6.8 billion, while 48 per cent of group revenue came from Etisalat’s international units, up from 35 per cent in the year-ago period.

This follows Etisalat’s purchase of a 53 per cent stake in Morocco’s Maroc Telecom for 4.14 billion euros in May. Former monopoly Maroc Telecom also has operations in Gabon, Mauritania, Burkina Faso and Mali.

Etisalat’s international operations will account for at least 50 per cent of group revenue in the future, Etisalat chief executive Ahmad Julfar said in a statement.

“Africa remains an important strategic region for our business,” he said.

Third-quarter revenue from Etisalat’s African cluster was Dhs3.7 billion, up more than 400 per cent from a year ago following its consolidation of Maroc Telecom.

Excluding Maroc Telecom, the African cluster’s revenue fell five per cent to Dhs661 million and was “mainly impacted by Ivory Coast and Tanzania”, the statement said.

Etisalat paid an effective royalty – or tax rate – of 44 per cent on its third-quarter net profit, down from 50 per cent a year ago due to changes in the way the government calculates this fee. This meant Etisalat paid Dhs1.72 billion in royalties in the third quarter, down from Dhs1.84 billion.

The company’s margin on earnings before interest, tax, depreciation and amortisation (EBITDA) was 53 per cent in the third quarter, up from 48 per cent a year earlier. Quarterly depreciation and amortisation costs rose 56 percent to Dhs1.7 billion.

Etisalat’s revenue from its operations in Asia fell six per cent to Dhs1.5 billion due to “subdued operations in Pakistan and a highly competitive environment in Afghanistan”. Pakistani subscribers fell 6.3 per cent to 26.7 million, while the unit’s revenue and EBITDA margin also declined.

By Reuters October 29, 2014
Arabian Business