Shares in etisalat, the UAE's largest tele-communications company, slumped the most in more than three and a half months yesterday after the company revealed its second quarter net profit fell 14.9 per cent.
The telco, which operates in 18 countries, reported a net profit of Dh1.59 billion for the second quarter, down from Dh1.87 billion the previous year as operating costs rose amid increasing competition in its home market.
Etisalat, which has the largest weighting on the Abu Dhabi Securities Exchange, dropped 1.36 per cent to Dh10.9 on the capital's bourse at the close of trading yesterday, its biggest single day drop since March 31, 2011.
The company also announced its half-year results, revealing it made a net profit of Dh3.4 billion in the first six months of 2011 and generating revenues of Dh15.96 billion during the same period.
"These are not particularly wonderful results for etisalat, which is continuing to feel the effects of competition in its home market from du," said Matthew Reed, senior analyst at Informa Telecoms and Media.
"Etisalat's UAE revenues declined quite sharply although the company did report a slight increase in UAE mobile subscribers.
"The one bright spot for etisalat is the continued growth in its international operations, which accounted for 24.6 per cent of the company's total consolidated revenues for the first half of 2011, up from 21 per cent in the year-before period," he added.
Etisalat, which also set an interim dividend of 25 fils per share for the year, said it had 7.5 million mobile subscribers, 1.1 million fixed lined subscribers and 1.4 million internet subscribers at the end of the first half, without giving comparative figures for the previous year.
Chandresh Bhatt, Vice-President of Research and Publications at Global Investment House, said etisalat had reported another quarter of weak performance.
"The subdued overall performance for second quarter was mainly due to intense competitive pressures in its home market UAE. We are of the opinion that both revenue and profitability from UAE are likely to remain under pressure," Bhatt said.
"Its second-quarter revenue from international operations grew by 18.7 per cent year-on-year to Dh2 billion. Among international operations, we are optimistic about etisalat's operations in Egypt and Saudi Arabia," he added.
It has been a testing six months for etisalat, which has faced a range of difficult issues including legal threats and failed acquisition bids.
From / Gulf News