Etisalat profit climbs 19%

UPDATE 1: UAE telecom sees Q3 net income rise to $571.7mn as mobile subscribers rise 11% to above 7mn.

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By  Ola Galal Published  October 18, 2008

Emirates Telecommunications Corp. (Etisalat) posted a 19-percent rise in third-quarter profit, meeting analysts' forecasts, as it added more users in a saturated home market and expanded abroad.

The second-largest Arab telecom firm by market value posted profit in the three months ended Sept. 30 of 2.1 billion dirhams ($571.7 million), it said in a statement, without giving a comparative figure for the year-earlier period.

The earnings were supported by a 23.8 percent rise in revenues in the quarter to 6.6 billion dirhams, data showed. Earnings per share of 1.21 dirhams in the first nine months compared with 0.92 dirham last year, Etisalat added.

The quarterly profit was in line with the average 2.14 billion-dirham forecast of three analysts in a net profit survey by newswire Reuters last month, with estimates ranging from 1.9 billion dirhams to 2.42 billion dirhams.

Etisalat, which lost its telecom monopoly in 2007 when Du started operations, signed on about 220,000 mobile phone users at home in the three months, taking its total UAE mobile phone users to 7.05 million, up 11 percent from a year earlier.

The UAE, the second-largest Arab economy, is home to about 4.5 million people, many of whom hold more than one line. Etisalat gave no details of its global subscribers.

As growth in new customers at home slows, Etisalat has been moving into new, populous markets to diversify its revenue sources, including holding stakes in operators in Saudi Arabia, Egypt, Pakistan and Indonesia.

Last month, Etisalat - which operates in 18 countries - also made a debut in India, buying 45 percent of start-up Swan Telecom for $900 million.

"Our acquisition in India has opened yet another key market, which will help power Etisalat's growth," Etisalat Chairman Mohammed Hassan Omran said in the statement. Omran said earlier this month the firm was eyeing opportunities in Iraq.

Etisalat, which this year received ratings from Moody's, Standard & Poor's and Fitch, was "in a very strong position to continue... international expansion", Omran added.

The global financial crisis, which has depressed asset values across the world, was creating an "opportunity" for Etisalat to make acquisitions, he was quoted by UAE daily Al-Bayan as saying last week.

Etisalat shares have outperformed the Abu Dhabi bourse, although they have been battered in the last month during a global market rout.

The stock has dropped 18.49 percent this year to 14.7 dirhams on Thursday - a 78 percent discount to EFG-Hermes' 26.1-dirham fair value target for the stock.

According to previous financial statements, Etisalat made 1.8 billion dirhams in the third quarter of 2007, including minority interest.

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