Etisalat’s net profit falls 40%

The telecom operator blamed the drop on its troubled Saudi Arabia affiliate Mobily and foreign exchange losses



Abu Dhabi-listed telecoms firm Etisalat missed analyst estimates by reporting a 40 per cent fall in second-quarter net profit on Tuesday that it blamed on its troubled Saudi Arabia affiliate Mobily and foreign exchange losses.

Etisalat, which operates in about 19 countries across the Middle East, Africa and Asia, made a net profit of Dhs 1.5bn ($408.4m) in the three months to June 30, the company said in a statement.

It did not provide a year-earlier figure, but its previous financial statement showed Etisalat made a profit of Dhs 2.51bn in the second quarter of 2014.

Analysts polled by Reuters had forecast the Gulf’s No.2 telecom operator by market value would post a quarterly profit of Dhs 2.16bn.

Saudi’s Mobily, in which Etisalat owns a 27.5 per cent stake, has been embroiled in an accounting scandal that has led the kingdom’s No.2 operator to restate much of its earnings from 2013 onwards.

In June, Etisalat warned Mobily’s latest restatement would cut its own 2015 net profit by Dhs 204m.

Etisalat said its quarterly profit slump was due to Mobily, higher depreciation and amortisation charges, bigger finance costs and foreign exchange losses, but did not provide further details or publish its second-quarter financial report.

The United Arab Emirates’ former monopoly generated second-quarter revenue of Dhs 13.3bn, up 6 per cent from a year earlier.

It has approved paying a half-year dividend of Dhs 0.4 per share, up 14 per cent on the same period of 2014.

Etisalat’s bought a 53 per cent stake in Maroc Telecom for 4.14bn euros in May 2014, boosting the UAE firm’s foreign revenues.

Maroc Telecom has operations in Gabon, Mauritania, Burkina Faso and Mali and this year also acquired Etisalat’s subsidiaries in six African countries. Maroc Telecom reported a second-quarter net profit of 1.51bn Moroccan dirhams ($154.86m), down from 1.61bn Moroccan dirhams a year earlier, according to Reuters calculations.