Etisalat reports rise in first quarter revenue as profit falls on higher costs

The UAE's biggest telecom operator says quarterly net income was pulled back by higher financing charges and forex losses

Etisalat's outgoing chief executive, Saleh Abdulla Al Abdooli, joined the company in 1992 and had been group chief executive since 2016. Courtesy Etisalat.

Etisalat, the UAE’s biggest telecom operator, reported a 1 per cent year-on-year rise in first quarter revenue, as its subscriber base continued to expand.

Consolidated revenue for the three months to March 31 climbed to Dh13.1 billion, the company said in accounts filed to the Abu Dhabi Securities Exchange, where its shares trade.

Net profit after federal royalty for the reporting period, however, declined 2 per cent to Dh2.2bn from a year earlier. Etisalat attributed the slide in profitability to a number of factors including higher depreciation and amortisation charges, a rise in financing costs and foreign exchange losses.

Quarter-on-quarter, net profit increased 11 per cent, it said.

“Today as we navigate through these challenging times, Etisalat has showed resilience and remained committed towards the communities it serves, ensuring business continuity and readiness, minimising impact on our operations and uninterrupted services to our customers," Obaid Humaid Al Tayer, chairman, Etisalat Group, said.

"Etisalat's performance in the first quarter reflects our agility in dealing with unprecedented market challenges and pressures facing the telecom sector globally."

Etisalat, which had a monopoly in the UAE until the country's second telecoms operator du entered the market in 2007, said its aggregate subscriber base expanded 5 per cent to 150 million during the first three months of the year.

Its subscriber base in the UAE grew to 12.7 million.

The company, which is majority owned by the government, allocated Dh500 million on capital expenditure in the UAE in the first quarter – a 16 per cent increase compared to the same period last year. The additional spending was focused on 5G network deployment and increasing network capacity in the country.

However, group-wide capex allocation decreased by 32 per cent year-on-year to Dh1.1bn.

In May last year, Etisalat became the first service provider in the region to offer a 5G network supporting smartphones for commercial use. Soon after, du and Bahrain's Batelco followed suit.

“[A] 5G network is more important than ever as it will be a key enabler of remote business, education, entertainment and has the capability of addressing customers’ current and future needs,” said Mr Al Tayer.

The operator, which is constructing more than 1,000 5G towers in the country, has teamed up with Chinese tech giant Huawei to roll out 5G across the UAE.

A 5G network delivers internet speed of up to 1.2 gigabits per second, which will gradually evolve to reach 10Gbps — more than 100 times faster than 4G.

The telco said its net profit margin for the quarter remained steady at 17 per cent.

The company’s board of directors also approved an interim dividend pay-out of 25 fils per share for 2020.

Etisalat, which owns and operates subsidiaries in the Middle East, Africa and Asia, reported a flat full-year net profit of Dh8.7bn in 2019 due to a dip in revenues from international operations and mobile earnings in the UAE. Revenue during the period decreased close to 0.3 per cent to Dh52.2bn.