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Eye on Etisalat
Etisalat is in Kipp’s spotlight as we take a closer look at the company’s Q3 results, its various future investment plans, and the competition.
October 20, 2010 3:43 by Eva Fernandes
Facing stiff competition at home, it is Etisalat’s international investments that are contributing to the group’s welfare. Speaking to Bloomberg, Nishit Lakhotia, a Bahrain-based analyst at Securities & Investment Co. BSC explains: “Etisalat is facing much higher competition and that’s hurting overall performance, subscriber growth is suffering. If it were not for Etisalat’s international operations, the earnings would have been much worse.”
Etisalat, which has a presence in more than eighteen countries including Saudi Arabia, Egypt, Nigeria, Afghanistan, India and Pakistan, is said to generate over 86 percent of its sales through its international operations, with Etisalat Egypt being responsible for a considerable portion of international revenue.
With the local market as saturated as it is, Etisalat is currently trying to increase its investments abroad. Amidst talks to acquire and merge with India’s wireless providers Reliance Communications Ltd and India’s mobile provider Idea Cellular Ltd., Etisalat has also offered $10.5 billion bid to acquire a 46 percent stake in Kuwaiti Zain. While the deal is not finalized as yet, should it go through Etisalat will gain access to the telecom market in Kuwait, Bahrain and Iraq (where Zain already operates). And given Zain’s debts, the deal is looking more and more likely.
A day ago, MEED reported that a source at Etisalat said: “Zain does not have a choice, it will only be a matter of time before Etisalat takes over, perhaps in a week.” Zain’s Chief Operating Officer Barrak al- Sabeeh told Bloomberg the company has paid the majority of its debts and is looking to restructure the remainder.
Whatever the outcome of the deal, the next few weeks will prove extremely interesting for Etisalat; their Q3 report underlines just how important their investments outside the UAE (in India and elsewhere in the Middle East) are to the company.
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