The Emirates Telecommunication Corporation – Etisalat, operating in 17 countries in the Middle East, Asia and Africa has announced its audited consolidated financial results for 2011, where the corporation has achieved growth in subscriber numbers by 22%, reaching 167million. The corporation has also witnessed 1% growth in revenues reaching Dh32.2 billion and profits of Dh11.6 billion before 50% Federal Royalty.
The results also reflected the Dirham one billion impairment on net profits as result of the decision by the Supreme Court of India which had cancelled all 122 licenses including that of Indian subsidiary Etisalat DB (India), accounts for a 24% percent drop in net profit to Dh5.8billion.
Excluding the impact of the impairment, operating profits before federal royalty remained robust at 42 percent and the group maintained a strong cash balance of Dh3.3 billion reaffirms its investment grade credit ratings.
“Etisalat has continued to achieve growth in its operating revenues. It has also maintained strong operating profit margins at 32% before Federal Royalty. If we set aside the drop of value in the Indian operation, we see that the corporation has maintained good profitability despite challenges that are being witnessed by business sectors across the globe and particularly in the Arab region,” Mohammed Hassan Omran, Etisalat’s Chairman, said.
“Our 2010 investments in broadband network infrastructure also spurred strong growth in the data and internet segments with combined revenues growing by 20 percent to reach Dh8 billion. These results support our long term investment strategy of diversifying revenues and driving greater efficiencies from our international operations while enhancing network capacity for the increasing demand for data usage.”
Omran highlighted that Etisalat has been successful in innovating new ways to diversify revenues. This includes offering smart and advanced devices to retain its customers in the long run. The success reinforces the corporation’s ability to combat the gradual decline in the growth of its local mobile operations due to market saturation and competition.
Despite competitive pressure, the corporation’s investments have achieved good returns. Group CEO, Ahmad Abdulkarim Julfar said that Etisalat achieved a healthy gain in its mobile subscriber base during the last quarter of 2011, thanks to customer loyalty in this segment, continuing efforts to revamp sales channels and the focus on value proposition in the latest mobile offerings.
“As the incumbent operator in a two player market in the UAE it is expected that we should feel competitive pressure especially in the mobile segment. However, we have retained a dominant share of revenues especially from higher ARPU customers, and strong growth in the data and internet segments which contributed 34 percent of UAE revenues,” Commenting on the operations, Julfar said.
“Our Dh1.8 billion investment in infrastructure to enhance our fibre –optic network and roll-out the LTE (Long Term Evolution ‘4G’) network means that we are prepared to capitalize on the trend for demand in data.”
“As we develop our international networks and drive greater efficiencies across the group, our overseas operations continue to perform strongly. In particular there were solid performances from Atlantique Telecom in West Africa and Etisalat Misr in Egypt, which witnessed a 40 percent growth in subscriber numbers,” Julfar, added.
Etisalat also reduced its capital expenditure during 2011 by 27 percent to Dh4.3 billion following the investment in Fibre- to-the-home in 2010. Capex in international operations was also reduced by political unrest in Egypt and the ongoing uncertainties in India which resulted in consolidated Capex representing 13.3 percent of consolidated revenues in 2011 compared to 18.4 percent in 2010.
The Board discussed several important matters including measures to improve Etisalat’s services as key priority. It also discussed the reduction and control of operating expenditures by initiating restructuring and outsourcing plans as a future strategy.
These suggestions aim to enable Etisalat cope with the pace of development witnessed in the ICT sectors and face financial challenges that telecom providers across the world, including Etisalat are facing due to rising costs of new technology necessary for organizations to increase their competitive edge in local and international markets, accompanied by drop in revenues of the global telecom industry.
Competition and drop in prices across the region has made it difficult for telecom service providers to maintain revenue levels, especially in emerging markets. Julfar added that the implementation of this strategy will give Etisalat time, effort and financial benefits in achieving its main objective of offering advanced, high-quality services to its subscribers in the face of the changing market conditions.
Julfar stressed the importance of investment in its human capital, particularly UAE nationals whom he considers the real wealth for any organization that aims to develop and maintain its talent and achieve sustainability. Therefore, Etisalat offers various incentives to its employees to innovate and participate in the process of nation building. To improve skills and capabilities of its National employees, Etisalat supports various specialized training institutions and has launched scholarship programs in addition to the establishment of the Etisalat Academy. Etisalat has also attracted top talent from the global telecom markets to enrich its capabilities in various markets.