Etisalat Q1 profit flat; foreign revenues jump

Etisalat , the Gulf Arab region's No. 2 telecom operator, reported flat quarterly profit that beat estimates as rising international revenue offset declines at home.

Abu Dhabi-based Etisalat, which posted falling profit in seven of the previous eight quarters, made a first-quarter net profit of 1.81 billion dirhams, compared with a forecast for 1.7 billion in a Reuters poll.
Etisalat, 60% owned by the government and which operates in 17 countries across the Middle East, Africa and Asia, said international revenue was 2.28 billion dirhams, up 21%.
An improved performance by Egyptian unit Etisalat Misr, which suffered during unrest last year that ended former president Hosni Mubarak's 30-year rule, likely helped the operator which did not break down its earnings by country.
"That is a large part of Etisalat's foreign operations," said a regional telecoms analyst who asked not to be identified.
"The situation in Egypt has improved and so Etisalat Misr is picking up. If you look at the past four quarters, international operations have provided about a quarter of total revenue."
The contribution of Etisalat's foreign operations is likely to remain around that level in the near term, the analyst said, after the firm announced its withdrawal from India in the wake of a 2G licence scandal.
"International could eventually inch up to 28 to 30%, but it will be a slow process - we're not looking at 2% gains each quarter," said the analyst.
Etisalat's international gains helped first-quarter total revenue rise 2% to 8.2 billion dirhams, offsetting a 2.6% drop in domestic revenue to 6.09 billion dirhams.
The company's profits have slid as rival operator du , which ended Etisalat's domestic monopoly in 2007, won market share and Internet-based phone calls hit the high-margin international calls business.
Dubai-based du now claims 46% of UAE mobile subscribers and its rapid rise may have prompted a shake-up of Etisalat's senior management.
In the past year, Etisalat has appointed a new group chief executive, chief financial officer and chief strategy officer, while Saleh Al Abdooli became chief executive of its UAE operations in February, having held the same post at Etisalat Misr.
"The new CEO for the UAE is used to working in more competitive markets, so he could take a more aggressive approach to pricing to fight back against du," added the analyst.