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Thu 7 Mar 2013 12:22 PM

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Etisalat sees 2013 revenue of up to $9.4bln

UAE's largest listed company looking to consolidate its smaller assets

Etisalat sees 2013 revenue of up to $9.4bln

Etisalat, the Gulf's No. 2 telecom operator, expects 2013 revenue of up to $9.4 billion, according to a presentation the company gave to analysts, with the former monopoly also looking to consolidate its smaller assets.

This consolidation in what it terms "fragmented markets" could be through mergers, acquisitions or asset sales, the document states.

The United Arab Emirates' largest listed company, which has operations in 15 countries in the Middle East, Africa and Asia, has suffered a sustained profit slump in recent years as it took write downs of $1.6 billion on troubled foreign units and tougher competition at home and abroad also weighed on the bottom line.

Etisalat's 2012 profit was 6.74 billion dirhams ($1.84 billion), down 24 percent from a 2009 peak of 8.84 billion dirhams. Yet revenue has grown over this period, reaching a record high of 32.95 billion dirhams ($8.97 billion) last year.

This was up 2.2 percent from a year earlier. The company expects revenue to grow 3-5 percent in 2013, according to the presentation.

This would lead to full-year revenue of between $9.24 billion and $9.42 billion. Etisalat does not normally provide a profit or revenue outlook to the stock market.

The company did not provide a precise profit forecast in the presentation, but does warn margins will be under pressure, with earnings before interest, tax, depreciation and amortization (EBITDA) slated to be 49-51 percent of revenue this year, compared with 51 percent in 2012.

Capital expenditure is expected to be 14-16 percent of revenue, up from 13 percent last year, the document showed.

Etisalat confirmed the presentation, but declined further comment.

The state-owned telco does not specify in which countries it wants to consolidate its operations through sale, merger or acquisitions, but these are likely to include low income African markets where it is a relatively small player and capital expenditure costs are often disproportionately high due to a lack of security, power and other infrastructure.

Etisalat is vying to buy Vivendi's 53 percent stake in Maroc Telecom and the UAE firm reiterated it will consider new acquisitions, providing these are in countries adjacent to existing "core operations", among the top two operators in that country and already cash generative.

It will also consider taking up management contracts to run existing operators as a means to enter a new market.

The company is wary of buying new, 'greenfield' licences, with this reluctance probably a reflection of its ill-conceived entry into India where it spent more than $1 billion before closing down operations and taking an $827 million impairment.

Etisalat is also keen on increasing stakes in core operations, "subject to feasibility and economic viability".

It previously stated a desire to up its stake in Etihad Etisalat (Mobily) from 28 percent, but the Saudi Arabia affiliate's share price is up 62 percent since the end of 2011, reaching a six-year high on Wednesday, and analysts doubt the UAE firm will be willing to buy at such a high price.

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