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Etisalat Profits Lifted by Maroc Telecom DealEtisalat Profits Lifted by Maroc Telecom Deal

Growth at UAE telecom giant Etisalat is fueled by a strong performance at home and takeover activity in Africa.

Iain Morris

April 20, 2015

3 Min Read
Etisalat Profits Lifted by Maroc Telecom Deal

Middle Eastern telecom giant Etisalat has flagged impressive growth in revenues and profits for its January-to-March quarter thanks chiefly to its takeover of Maroc Telecom last May.

The operator was also buoyed by a strong performance in the UAE, its domestic market, reporting a 30% year-on-year increase in overall revenues, to 12.9 billion Emirati dirhams ($3.5 billion), and an 8% rise in net profit, to AED2.2 billion ($600 million).

The Saudi Arabian stock exchange reacted positively to the publication of results on April 19, with Etisalat 's share price closing 4.6% higher.

In a results presentation, Etisalat also revealed that its customer base had grown from 145 million in March 2014 to 173 million last month due largely to the Maroc Telecom acquisition as well as subscriber gains in Nigeria.

Etisalat last year bought a 53% stake in Maroc Telecom for about €4.2 billion ($1.14 billion at today's exchange rates) from French media conglomerate Vivendi, while Maroc Telecom earlier this year took control of Etisalat's operations in six African markets -- those being Benin, the Central African Republic, Gabon, the Ivory Coast, Niger and Togo. (See Etisalat to Buy Vivendi's 53% Stake in Maroc Telecom and Eurobites: SSE Takes On BT in Ethernet.)

Besides being Morocco's telecom incumbent, Maroc Telecom also provides services in Mauritania, Burkina Faso and Mali.

Etisalat said that Maroc Telecom added more than AED2.9 billion ($790 million) to revenue growth last quarter, with another AED717 million ($195 million) coming from the UAE, which still accounts for about 56% of total sales.

The state-backed operator faces limited competition at home and has attracted new prepaid and contract mobile customers over the past year without suffering a material decline in average revenue per user.

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But Etisalat was weighed down by difficulties elsewhere, reporting revenue declines in Egypt and Pakistan and only a small increase in Nigeria, despite customer growth, due to currency devaluation.

The operator lost five million customers in Egypt between March 2014 and March this year and witnessed a decline in its EBITDA margin because of spending on network rollout.

Meanwhile, its Pakistani business was hurt by intense pricing competition in the country's mobile market and finished the quarter with 25.8 million customers, down from 27.6 million a year earlier.

Etisalat claimed to have beaten its financial target of increasing sales by 8-10%, but revenues would have inched up just 1% were it not for the Maroc Telecom transaction.

The operator had AED1.3 billion ($350 million) in net cash on its balance sheet at the end of March 2015.

— Iain Morris, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, News Editor, Light Reading

About the Author(s)

Iain Morris

International Editor, Light Reading

Iain Morris joined Light Reading as News Editor at the start of 2015 -- and we mean, right at the start. His friends and family were still singing Auld Lang Syne as Iain started sourcing New Year's Eve UK mobile network congestion statistics. Prior to boosting Light Reading's UK-based editorial team numbers (he is based in London, south of the river), Iain was a successful freelance writer and editor who had been covering the telecoms sector for the past 15 years. His work has appeared in publications including The Economist (classy!) and The Observer, besides a variety of trade and business journals. He was previously the lead telecoms analyst for the Economist Intelligence Unit, and before that worked as a features editor at Telecommunications magazine. Iain started out in telecoms as an editor at consulting and market-research company Analysys (now Analysys Mason).

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