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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
Recently in the news thanks to its $10.5 billion attempt to buy a 46 per cent stake in Kuwaiti Zain, the UAE’s biggest telecoms company Etisalat has just released its third quarter report. The big story? Things aren’t looking all rosy.
Kipp puts Etisalat in the spotlight as we take a closer look at the Q3 report, the company’s future investment plans, and their competition.
Q3 records steep decline in profits
According to Etisalat’s financial review, the group’s net profits dropped Dh.1.2 billion from last year. While the value of the group’s assets increased by 1.2 percent, reaching Dh.40.9 billion, earnings per share for the nine months dropped to Dh.0.71 from the Dh.0.87 it was recording during 2009.
Analysts say the noticeable drop in revenue is the result of the saturated nature of the telecoms market. Speaking to the National, Irfan Ellam, a telecoms analyst with Al Mal Capital, said: “What we’re seeing right now is a very saturated market in the mobile side. Net additions will be in the tens of thousands and not in the hundreds of thousands as we’ve seen before.”
In fact The National reported that Etisalat added just 10,000 new mobile subscribers in the quarter to their already 7.81 million existing mobile subscribers, and lost about 40,000 internet users to take them to 1.35 million.
Aside from the saturated market, some are also pointing to the increased competition from rival telecom provider Du for Etisalat’s relatively slow year in the UAE. By contrast, Du CEO Osman Sultan expects earnings at his company to grow even as competition intensifies, according to Bloomberg. The news agency reports that in the upcoming Q3 report, scheduled to be released in the next week, Du is likely to announce a 57 percent increase in earnings to Dh.123 million. Established in 2006, Du’s client base has continued to grow all year, and in the second quarter they were recording double profits year on year.
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