The national telecommunications company Etisalat today announced another strong quarter of growth, reporting a 19 per cent increase in net profit. Profits in the third quarter increased to Dh2.1 billion (US$572.04 million), and revenue rose to Dh6.6bn, up 24 per cent from the same quarter a year earlier. For the first nine months of the year, profits per share stood at Dh1.21, up 32 per cent from the Dh0.92 recorded in the same period last year.
Etisalat's growth reflects "the high levels of efficiency and performance at all levels of its management," said Mohamed Omran, the company chairman. Etisalat has used its dominance of the UAE market to fund rapid international expansion. Mohamed al Qamzi, Etisalat's chief executive, called the figures "tremendous". But the company's seemingly endless stretch of new customer acquisitions in the UAE - it now has 1.5 mobile subscribers for every man, woman and child in the country - continued to show signs of slowing.
Etisalat's customer base reached 7.05 million by the end of last month, with 178,000 new subscribers added in the three-month period, almost 12 per cent less than the 201,000 added in the same period last year. Despite the slowdown, the 11 per cent overall increase in subscribers beat the expectation of analysts at the Cairo-based investment bank EFG-Hermes, which had predicted an increase of 7.1 per cent in a note to clients days earlier.
Growth in fixed-line telephone and internet customers was also sluggish, with just 10,000 new phone subscribers and 60,000 new internet customers. These numbers represent growth rates of one per cent and six per cent respectively. The numbers suggest a maturing UAE market, but one that is expected to remain highly profitable for the company well into the future. Analysts expect Etisalat's international businesses - which reach high-growth markets such as Nigeria, Egypt and India - to complement the company's mature domestic operations.
Etisalat does not reveal the specific results of its international subsidiaries, but they are believed by analysts to account for more than 10 per cent of the company's revenues. When its networks in Nigeria and India become active, it will access a potential customer base of 1.6 billion people in five of the world's 10 fastest-growing mobile markets. Etisalat's stock price has dropped by almost a quarter since the beginning of the year, as foreign buyers unleashed a torrent of selling on local markets amid the global financial crisis. Shares in Etisalat cannot be owned by foreigners, but are far from immune to the broad plunge in regional stock markets.
Etisalat stock fell 5.1 per cent on Thursday, the last day of trading before results were announced yesterday. Etisalat's share price has fallen 22.6 per cent this year. The highlight of the third quarter for the company was its acquisition of Swan Telecom, one of a number of newly licensed national operators in India, the world's fastest-growing mobile market. The company is likely to follow this in the coming quarter by announcing the acquisition of Korek, a mobile operator based in the Kurdish region of northern Iraq.