Etisalat and du shares expected to trade lower

Markets Wrap: Shares of the country's two telecommunications operators are expected to decline when they resume trading on Tuesday, fund managers said.

Trading of Etisalat and du shares were suspended yesterday. Jeff Topping / The National

Shares of the country's two telecoms operators are expected to decline when they resume trading today, said fund managers.

Etisalat and du trading was suspended yesterday to provide ample time for investors to digest the release of government royalty fees to be paid this year through to 2016.

Etisalat, the first operator in the Emirates, will be required to pay a fee of 15 per cent on its revenues and 35 per cent on profits from this year to 2016.

Du, which launched its operations only in 2007, will be required to pay 17.5 per cent on profits this year and 5 per cent on revenues.

"The shares will probably go down for du, despite the fact that the company has taken provisions in previous years in expectation, ahead, of the royalty fee which will absorb some of the hit," said Wadah Al Taha, the chief investment officer at Al Zarooni Group, an investment company in Dubai.

"For Etisalat, the combination of taking from profit and revenues will cause some confusion for retail investors.

"I think the decision will cause a shift in strategy for both companies, who will try to offer services that are not listed by the regulator, that are exempted from the royalty fees."

Etisalat's shares have advanced 9 per cent so far this year, trading at Dh9.96, while du's shares have surged 34.2 per cent, trading at Dh3.88 each.

The Abu Dhabi Securities Exchange General Index slipped 0.1 per cent to 2,685.57 points, while the Dubai Financial MarketGeneral Index added 0.05 per cent to 1,613.47.