Etisalat Q3 Profit Up 28% After Indonesia Sale

Etisalat, the United Arab Emirates’ number one telecom operator, posted a 28 per cent rise in third-quarter profit, beating analysts’ estimates after the former monopoly booked gains from a stake sale in Indonesia.

The firm, which operates in 15 countries across the Middle East, Africa and Asia, made a net profit of Dhs2.21 billion ($602 million) in the three months to September 30, up from Dhs1.72 billion in the year-earlier period.

This included net profit of Dhs430 million from selling a 9.1 per cent stake in Indonesia’s PT XL Axiata that cut Etisalat’s holding to 4.2 per cent.

Analysts polled by Reuters forecast Etisalat would make a quarterly profit of Dhs1.9 billion.

Third-quarter revenue was Dhs8.01 billion, near-flat from a year ago. Etisalat’s foreign operations generated revenue of Dhs2.4 billion, up 7 per cent year-on-year.

The operator, number two in the Gulf by market value, said operating expenses dropped 8 per cent to Dhs4.6 billion as falling sales costs and lower depreciation and amortisation expenses more than offset a 6 per cent rise in wages.

After a bumpy few years that saw annual profit fall by a third between 2009 and 2011, Etislat has refocused on its domestic market, where rival du has built up a 47.2 per cent share of mobile subscribers since launching services in 2007.

Etisalat had 7 million domestic mobile subscribers as of September 30, up 11 per cent from a year ago, but margins remain under pressure as the UAE’s largely expatriate foreign workforce increasingly uses internet-based phone services, hurting its lucrative international call and text businesses.

The firm is also placing a greater emphasis on its foreign units in high growth, high population markets such as Saudi Arabia, Nigeria and Egypt, while chief executive Ahmad Julfar last week ruled out exiting any foreign markets.

Egypt unit Etisalat Misr had third-quarter revenue of Dhs1.3 billion, up 9 per cent from a year ago, representing more than half Etisalat’s foreign earnings.

Revenue from its other Africa operations rose two per cent to Dhs689 million, while Asia was up 10 per cent at Dhs408 million.

Etisalat had a net cash balance of Dhs7.2 billion as of September 30.