Etisalat May Restructure

The telecoms operator said it is discussing restructuring options as it struggles to stall dropping profits.

Telecoms operator Etisalat may restructure its operations to cut costs, the company said on Monday, as it tries to arrest falling profits.

The board of the former monopoly, which operates in 17 countries in the Middle East, Africa and Asia, also proposed a 60 per cent dividend for 2011, the same as 2010.

The company said its board had discussed restructuring and outsourcing options.

“Competition and (a) drop in prices across the region has made it difficult for telecom service providers to maintain revenue levels, especially in emerging markets,” it said.

On February 9, Etisalat reported annual net profit fell 24 per cent to Dhs5.8 billion ($1.6 billion), due in part to impairments it took relating to Indian affiliate Etisalat DB, which is poised to lose its licence.

Etisalat has reported falling profits in seven of the past eight quarters as earnings from its foreign units fail to make up for sagging home revenue.

The domestic decline is due to price competition from du and a move among the UAE’s mainly expat population to uses Voice over IP (VoIP) services for international calls.

About three-quarters of Etisalat’s revenue is derived domestically, according to its third-quarter results, the most recent revenue breakdown the company has disclosed.

Etisalat’s West African subsidiary Atlantique Telecom and Egyptian unit Etisalat Misr each achieved a 40 per cent rise in subscriber numbers last year, group chief executive Ahmad Abdulkarim Julfar said in Monday’s statement.

Etisalat had a net cash balance of Dhs3.3 billion at the end of 2011.