Etisalat to acquire elGrocer to strengthen its digital services portfolio

The deal will see elGrocer complementing UAE telecom operator's existing marketplace services under its Smiles platform

Etisalat is adding elGrocer to its portfolio to reach more consumers. Photo: Etisalat

Etisalat Group, the UAE's biggest telecommunications operator, signed an agreement to acquire 100 per cent of Dubai-based grocery delivery platform elGrocer DMCC, strengthening both its digital portfolio and consumer engagement.

The deal will be funded by cash and its financial impact will not be significant compared to Etisalat’s financials, Etisalat said in a statement to the Abu Dhabi Securities Exchange, where its shares are traded. The terms and value of the transaction were not disclosed.

"This acquisition will support Etisalat’s digital ambitions by enriching its services bringing it closer to the daily lives of the consumers and unlocking synergies that drive a diversified and integrated product portfolio," the company said in its regulatory filing on Thursday.

The deal will help elGrocer expand its services, offerings, technology and other aspects of the business to serve more customers and in new ways, Nader Amiri, founder and chief executive of elGrocer, said.

"This will help build on our strong customer-focused platform and operations we have built, and significantly accelerate it to make it more known and accessible to everyone in the UAE. With our digital and operational experiences and with Etisalat's backing and the Smiles offerings we can do this better and faster with more unique services in the market," he told The National on Thursday.

Etisalat did not respond to a request for comment.

Online shopping has surged in the wake of the Covid-19 crisis, which permanently changed consumer habits.

A Visa survey this week found that more than six in 10 consumers in the UAE and Saudi Arabia are now shopping online more compared to pre-pandemic levels.

Earlier research by Network International revealed that UAE shoppers spent 40 per cent more per visit on supermarket websites than in-store during 2020, indicating that these trends are here to stay.

"The pandemic has helped accelerate the pace of e-commerce adoption globally, and even more so in the UAE, given the the high smart device penetration, driven by Etisalat's big role in driving digital services and offerings as a pioneer. Now that people are more aware of this and [have] experienced it, the adoption rates, frequency and value of purchases will continue to increase," Mr Amiri added.

The elGrocer transaction is the latest in a string of deals Etisalat has forged to boost its portfolio. Last month, Etisalat signed a binding agreement with Abu Dhabi-based artificial intelligence services provider G42 to merge their data centre services and create the UAE's largest data centre provider.

In August, Etisalat acquired an additional stake in Maroc Telecom Group, increasing its effective ownership from 48.4 per cent to 53 per cent.

The UAE is ranked as one of the highest globally in terms of smart device penetration, with 99 per cent of its almost 10 million population active internet users, Global Media Insight data shows. Rated as one of the most advanced countries for online shopping and e-commerce market in the Middle East and North Africa, Etisalat said the elGrocer acquisition will contribute to the country's growing digital economy.

“Online shopping has redefined retail in the last decade with an increasing number of consumers moving to online transactions," Khaled ElKhouly, chief consumer officer of Etisalat UAE, said in the statement.

"Considering Etisalat’s leadership role in the acceleration of UAE’s digital transformation, we have been continuously working on new, innovative digital services and this acquisition is in line with our strategy to empower consumers, enhance engagement through our digital marketplace platform and drive diversification of our business.”

Founded in 2016, elGrocer will complement Etisalat UAE’s existing marketplace services under the its Smiles platform, including online food delivery, lifestyle offers and a loyalty programme across more than 7,000 outlets in the UAE.

"Now, we start a new chapter combining what we have built with Etisalat’s innovative services and Smiles’ powerful offering, as we look forward to providing customers with even more delightful experiences and benefits," Mr Amiri said.