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Tue 29 Jan 2008 09:54 AM

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Etisalat profit growth rate declines

UAE operator profit misses analysts' forecasts in Q4, profit growth rate declines year-on-year.

Etisalat profit growth rate declines
GROWTH SLOWS: Etisalats growth rate recedes as spending abroad cuts into profits. (Getty Images)

UAE operator Etisalat announced on Monday fourth quarter profit of 1.76 billion dirhams ($480 million) but showed a markedly slower growth rate than in 2006, and missed analyst forecasts.

The second largest Arab telecom operator grew 19.7% during 2007, down from the 38% posted in 2006.

In a recent Reuters poll analysts had forecasted profit of between 1.61 billion dirhams and 2.03 billion dirhams, with an average prediction of 1.83 billion dirhams.

Etisalat has been investing heavily in a drive to expand regionally and, while its subscriber base has been growing, mounting expenses abroad have cut into overall profit margin .

Etisalat has spent more than $6.5 billion on foreign acquisitions in the past three years, including a 66% stake in Egypt's third mobile phone firm, which started operations in May.

The telecom giant, which now operates in about 16 countries, lost its monopoly position in its home market, the UAE, last February when rival du began operations in the country.

The company’s penetration rate for mobile phones, at 150%, is the highest in the world, with internet penetration at around 60%, the strongest in the Middle East.

Etisalat grew by approximately 200,000 subscribers in the three months from September to December of 2007, bringing the total number of customers to around 6.4 million. Revenue for the entire year was up 31%, totaling 21.34 billion dirhams.

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