Etisalat reports 51% increase in second-quarter profit

Abu Dhabi-listed Etisalat on Wednesday reported a 51 per cent rise in second-quarter net profit, mainly thanks to lower costs and forex exchange gains.

Etisalat, which operates in about 17 countries across the Middle East, Africa and Asia, made a net profit of Dh2.3 billion in the three months ending June 30, the company said in a statement . This compares with a profit of Dh1.53bn a year earlier.

Second-quarter revenue was Dhs 13.3bn, up 2 per cent from the same period a year ago.

“The increase in profit is attributed to lower finance costs, incurring forex gain during the period as compared to forex loss in the same period last year,” Etisalat said in a statement.

The results beat analysts’ expectations. Sico Bahrain had forecast Etisalat would post a quarterly net profit of Dh1.92bn. Egyptian investment bank EFG-Hermes predicted a net profit of Dh2bn.

“The year-on-year net profit surge is due to non-operating items,” said Omar Maher, a telecoms analyst at Cairo-based EFG-Hermes. “In the second quarter of 2015, Etisalat’s net profit was impacted by foreign exchange losses, losses from Mobily [Etisalat’s Saudi unit] and other discontinued operations.”

By the end of the second quarter, Etisalat had 163 million subscribers, up 1 per cent from a year earlier. Subscriber growth was driven by Etisalat’s operations in UAE, Egypt, Pakistan, Afghanistan, Etisalat said.

In the UAE, Etisalat’s subscriber base reached 12.1 million, representing a year-on-year growth of 7 per cent. Etisalat said that growth in its home market was thanks to strong performance in the mobile and home segments.

“Etisalat’s results for 2Q16 underline the continued importance of domestic operations to the group, despite its international expansion,” said Mathew Reed, a Dubai-based analyst with consultancy Ovum.

“We can expect to see Etisalat pushing ahead with the launch of new services in the UAE in order to maintain its momentum in its home market.”

Capital expenditure during the second quarter was at Dh600,000, down 33 per cent compared to the same period last year.

“Etisalt’s growth in the UAE is interesting,” said Mr Maher. “It is a proof that the UAE economy is still growing and not slowing down. This is a good indicator,”

Etisalat said it is proposing an interim dividend of 40 fils for the first half of this year.

In March, the telecoms operator appointed Saleh Abdullah Al Abdooli as new chief executive, after former chief executive Ahmad Julfar resigned for personal reasons.

Mr Al Abdooli said that the restructuring of the company, which was initiated earlier this year and finalised during the second quarter, has helped Etisalat to improve “overall performance”.

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