Is Etisalat Going to be Telecom Giant Throughout the World?
The Etisalat board on Monday recommended a cash dividend of 60 per cent of the face value of its shares for 2009. The board also recommended distributing one bonus share for every 10 held, according to a company statement to the Abu Dhabi bourse yesterday. Etisalat shares did not trade yesterday as the company held its board meeting. The company is negotiating to buy a majority stake in the Kurdish telecom operator Korek, and is looking for further acquisitions in Algeria and Malaysia, Chairman Mohammad Omran said yesterday.
The company aims to raise the contribution of its international investments to 20 per cent of revenues from 10 per cent now by 2013, Omran said yesterday. ”International expansion is very important to us,” Omran said at a press conference, adding the company is targeting six markets in the Middle East, Asia and Africa.
Etisalat, which operates in 18 markets and is considering entering six more this year, relies on its UAE customers for 98 per cent of net profit. But with the local mobile penetration rate surpassing 200 per cent last year, it is pursuing international expansion more aggressively.
Earlier this month, the company raised its stake in India’s etisalat DB from 45 per cent to 50 per cent and purchased 18 per cent in the West African operator Atlantique Telecom to complete its acquisition of the company. “The [20 per cent] target doesn’t seem unreasonable,” said Matthew Reed, senior analyst at Informa Telecoms and Media. “But emerging markets are getting tougher [to operate in].”
Pakistan, where etisalat paid $2.6 billion (Dh9.54 billion) for 26 per cent in PTCL, the country’s largest telecom operator, is one market that has not lived up to its potential for etisalat since the 2005 acquisition.
“Pakistan has proved to be a very difficult market for Etisalat,” Reed said. “Nigeria could also be tough because of the number of operators. Etisalat is coming in as the fifth GSM operator so taking on those very established players could be difficult.”
PTCL’s average revenues per user (ARPU) have declined to about $3, Omran said, ranking it as the lowest of the company’s international operators. By comparison, a recent report by Egyptian investment bank EFG-Hermes put ARPU’s for etisalat in Egypt at $5-$6 and UAE at $49.
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