UAE federal government lifts Etisalat foreign ownership restriction

Etisalat set a 20 per cent cap on foreign ownership of its shares. Jaime Puebla / The National

The government has lifted the restriction on foreign ownership of Etisalat shares, opening up the country’s biggest publicly traded company to overseas investors for the first time.

The landmark decision is the culmination of years of talks and will allow as much as 20 per cent of the telecoms company to be owned by foreign investors, the company said.

“The federal government decided to lift the restriction of Etisalat stock ownership by local institutions, foreign institutions and expatriate individuals,” it said.

The government would retain its 60 per cent shareholding in the operator and has no plans to reduce its stake, according to the statement. “Additional information will be provided to ADX [Abu Dhabi Securities Exchange] once received from the proper authorities,” it added.

The company’s shares, which have risen about 20 per cent this year, were suspended from trade yesterday morning in the run up to the announcement.

A spokesman for the operator declined to say when foreign investors would be able to purchase Etisalat shares, or when the decision had been taken to lift the restrictions.

Foreign investors have long sought access to Etisalat shares after the raising of foreign investment limits of other local stocks including Deyaar, Mashreqbank, Dubai Islamic Bank and Abu Dhabi Islamic Bank.

"A lot of investors want to increase their exposure to the UAE, and Etisalat will be a very good conduit for that purpose," said Muhammad Shabbir, the head of equity funds and portfolios at Rasmala Investment Bank in Dubai.

In addition to those seeking greater exposure to the UAE, Mr Shabbir said the opportunity to invest in Etisalat would be welcomed by investors seeking broader exposure in the region’s telecommunications, media and technology sector.

“In the telecoms space there have been a number of issues with regional operators in Saudi and Kuwait, so Etisalat’s entry offers a chance to diversify.”

In addition to its UAE operations, Etisalat has a footprint in 19 countries across the Middle East, Asia and Africa, including Egypt, Saudi Arabia, Morocco and Nigeria. The operator posted revenue of Dh12.9 billion for the first three months of the year, up 30 per cent on 2014.

Opening up UAE publicly traded companies to increased foreign ownership is key to keeping up with emerging markets requirements, EFG-Hermes said last week. “We believe that the most important criteria to address is openness to foreign ownership,” the bank said.

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