Shares in Etisalat sank to a two-year low yesterday, as the Middle East's biggest telecommunications company faces many challenges.
Etisalat's shares have fallen 13 per cent so far this year, closing at Dh9.39 yesterday.
With more people equipped with mobile phones, telecoms companies across the Middle East are facing a more difficult time than in previous years, said Fadi Al Said, the head of investments at ING Investment Management.
"Competition is tougher, penetration rates are higher and prices are going to go down to be sure," he said. "The business model is at an inflection point." The company's management reshuffle has been well-received by investors, with the appointment of Ahmad Julfar as the group chief executive and Serkan Okandan, a specialist in mergers and acquisitions, as the chief financial officer, seen as positives.
But Etisalat's plan to put international missteps behind it, such as this year's aborted bid to acquire Kuwait's Zain, have met with stumbling blocks at every turn.
Traders ditched Etisalat stocks ahead of the results of a possible upgrade of UAE exchanges by MSCI to "emerging-market" status, which could have brought fresh capital inflows from international fund managers to large-cap companies.
Investors sold out of Etisalat's stocks, ownership of which is restricted to UAE nationals, in the run-up to MSCI's announcement to target companies more easily accessed by overseas investors. The index provider's decision ultimately left the Emirates and Qatar unchanged as "frontier markets".
The strongest performance among Etisalat's assets came from Etisalat Misr in Egypt and Atlantique Telecom in Africa, analysts from JPMorgan wrote in a research report.
Strong revenue growth among mobile and fixed data in Etisalat's native UAE was a silver lining to a recent dip in profits for the third quarter of 1 per cent, offsetting a decline in international revenues.
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