October 23, 2012 / 3:20 PM / 5 years ago

UPDATE 1-UAE Etisalat Q3 profit up 28 pct after Indonesia sale

* Q3 profit 2.21 bln dirhams vs 1.72 bln dirhams a yr ago

* Etisalat nets 430 mln dirhams from Indonesia stake sale

* Revenue from foreign units up 7 pct, offsets home drop

By Matt Smith

DUBAI, Oct 23 - Etisalat, the United Arab Emirates’ No.1 telecom operator, posted a 28 percent rise in third-quarter profit, beating analysts’ estimates after the former monopoly booked gains from a stake sale in Indonesia.

The firm, which operates in 15 countries across the Middle East, Africa and Asia, made a net profit of 2.21 billion dirhams ($602 million) in the three months to Sept. 30, up from 1.72 billion dirhams in the year-earlier period.

This included net profit of 430 million dirhams from selling a 9.1 percent stake in Indonesia’s PT XL Axiata that cut Etisalat’s holding to 4.2 percent.

Analysts polled by Reuters forecast Etisalat would make a quarterly profit of 1.9 billion dirhams.

Third-quarter revenue was 8.01 billion dirhams, near-flat from a year ago. Etisalat’s foreign operations generated revenue of 2.4 billion dirhams, up 7 percent year-on-year.

The operator, No.2 in the Gulf by market value, said operating expenses dropped 8 percent to 4.6 billion dirhams as falling sales costs and lower depreciation and amortisation expenses more than offset a 6 percent rise in wages.

After a bumpy few years that saw annual profit fall by a third between 2009 and 2011, Etislat has refocused on its domestic market, where rival du has built up a 47.2 percent share of mobile subscribers since launching services in 2007.

Etisalat had 7 million domestic mobile subscribers as of Sept. 30, up 11 percent from a year ago, but margins remain under pressure as the UAE’s largely expatriate foreign workforce increasingly uses internet-based phone services, hurting its lucrative international call and text businesses.

The firm is also placing a greater emphasis on its foreign units in high growth, high population markets such as Saudi Arabia, Nigeria and Egypt, while chief executive Ahmad Julfar last week ruled out exiting any foreign markets.

Egypt unit Etisalat Misr had third-quarter revenue of 1.3 billion dirhams, up 9 percent from a year ago, representing more than half Etisalat’s foreign earnings.

Revenue from its other Africa operations rose 2 percent to 689 million dirhams, while Asia was up 10 percent at 408 million dirhams.

Etisalat had a net cash balance of 7.2 billion dirhams as of Sept. 30. ($1 = 3.6730 UAE dirhams) (Reporting by Matt Smith; Editing by Hans-Juergen Peters)

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