UAE's e& posts 3.7% rise in Q2 profit as revenue and subscriber base grow

Company also says it will acquire a controlling stake in assets of Czech investment company PPF Telecom to expand into Central and Eastern Europe

Hatem Dowidar, group chief executive of e&, said the company has demonstrated 'a strong sense of resilience and adaptability'. Leslie Pableo / The National

UAE telecoms and technology company e&, formerly known as the Etisalat Group, has reported that its profit rose 3.7 per cent in the second quarter as its revenue and subscriber base grew.

Net profit attributable to the owners of the company in the three-month period ended in June climbed to Dh2.52 billion ($686.2 million), from Dh2.43 billion a year ago, the company said on Tuesday in a filing to the Abu Dhabi Securities Exchange, where its shares are traded.

Revenue in the quarter stood at Dh13.6 billion, up 4.6 per cent year on year from Dh13 billion. Operating profit rose more than 10 per cent to Dh3.59 billion, from Dh3.26 a year ago.

The Abu Dhabi company's telecoms arm, etisalat by e&, saw its subscriber base across both mobile and fixed services grow 5.1 per cent in the second quarter, with revenue across all categories rising 5.8 per cent.

“We have demonstrated a strong sense of resilience and adaptability. Our relentless focus on excellence and innovation has allowed us to thrive in the dynamic landscape of the telecommunications and technology sectors, maintaining our growth momentum,” Hatem Dowidar, group chief executive of e&, said in the filing.

For the first half of 2023, e&'s revenue was up 1.1 per cent at Dh26.62 billion, from Dh26.33 billion a year earlier, while net profit was down 3.2 per cent to Dh4.71 billion, from Dh4.86 billion in the same period in 2022.

Operating profit in the six months ended in June was down about 2.2 per cent to Dh6.53 billion, from Dh6.68 billion a year ago.

Shares of e& were flat at the close of trading on the ADX on Tuesday.

Also on Tuesday, e& said that it has signed a binding agreement with Czech company PPF group to acquire a controlling stake in its Bulgaria, Hungary, Serbia and Slovakia operations, as it aims to expand into the Central and Eastern Europe markets.

The upfront consideration for the acquisition, plans of which were first reported on last month, is €2.15 billion ($2.36 billion), the statement said.

The transaction, which will be carried out by the e& international unit, will allow e& to tap into a combined subscriber base of more than 10 million, the statement said.

The transaction is also subject to up to €350 million in earn-out payments to PPF if the PPF Telecom assets exceed certain financial targets within the three-year period after closing and is subject to a claw back if such financial targets are not achieved, e& said.

The partnership will retain PPF Telecom chief executive Balesh Sharma to “ensure continuity of operations while drawing on the broad expertise of PPF Telecom’s teams in their markets”.

"The acquisition aligns with e&’s strategic ambition to accelerate international growth and diversify geographically. This represents an unparalleled opportunity to establish a strong presence and foster development within the dynamic CEE region," Jassem Alzaabi, chairman of e&, said in a filing.

Telecoms operators with strong balance sheets are increasingly seeking mergers and acquisitions to gain access to new markets and exchange expertise that could open up new markets.

E& is expanding its presence and has been on acquisition spree, part of a wider transformation in the telecoms industry that is integrating new technologies into their operations to expand their consumer bases and add new revenue lines amid intensifying competition.

This year, e& increased its stake in Vodafone Group to 14 per cent as it continues to consolidate its shareholding in the British company as part of its international expansion plans.

In July, e& said it was considering acquiring a stake in Ethiopia's Ethio Telecom, which would potentially boost its international portfolio. That would potentially give e& access to 25 other countries across Europe, North America, Asia and Africa.

In May, it invested $60 million for a 10 per cent stake in South Korea’s cloud management company Bespin Global, and also formed a joint venture that will provide public cloud services in the region.

In April, it signed a $400 million deal to acquire a majority stake in Careem’s Super App, a spin-off from Uber, as part of efforts to expand its consumer digital offerings.

The company in 2022 signed a deal with Abu Dhabi holding company ADQ to acquire a majority stake in video-streaming service Starzplay Arabia.