Etisalat sees 14% increase in revenue beginning of 2009

The increase comes on the back of a 17% overall rise in revenues for 2008.

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By  Joanna Hartley Published  March 23, 2009

The UAE’s national telecommunications operator saw its revenue grow by 14 percent in the first two months of this year, despite the economic slowdown taking hold in the region.

Such a healthy start to 2009 for Etisalat comes on the back of a 17 percent increase in revenue for the whole of 2008, which saw the figure rise to AED23.76bn ($6.46bn), according to UAE daily The National.

The figures were presented at an analysts’ briefing earlier this month where Etisalat, which controls more than two-thirds of the UAE market, reported that it had been largely immune to the global crisis.

The briefing came ahead of Sunday night's general meeting where shareholders were asked to vote on a healthy dividend payment, which analysts predicted would be popular with investors.

However, analysts and industry experts believe that the weakening economy will eventually hit the telecommunication sector as declines in population, tourism and economic activity, take hold.

“Telecommunications is certainly a defensive sector that will do better than many others,” said Simon Simonian, vice president for research at Shuaa Capital in Dubai who attended the briefing.

“But it should still be affected by declines in population, economic activity, tourism; so a gradual slowdown like this is certainly an encouraging sign,” he added.

Etisalat revealed at the analysts meeting that it had made provisions for a rise in unpaid bills this year, as the economic condition worsens, by making a AED1.33bn adjustment to its Q4 results for 2008 in relation to debts and asset write-downs.

The move had meant that the fourth quarter results were 20 percent down on 2007.

But provided a cushion for possible bad debt in the future, which was a high risk in the UAE where many customers paid by monthly bill, the company said.

“It is basically a buffer for 2009. They felt the best thing to do is to make a general provision for bad debt,” Simonian said.

“Management are often very conservative with these types of estimates, and we believe that this is a very conservative provision.”

The strength of Etisalat’s Egyptian business, Etisalat Misr, was also revealed at the briefing with figures showing it contributed to almost 50 percent of revenues earned from international subsidiaries.

The company has invested billions of dirhams into its Egyptian operations since winning the country’s $2.9bn third mobile licence in 2006.

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