Etisalat 2013 net at Dh7bn

Etisalat missed analysts' forecasts with a 70 per cent rise in fourth-quarter net profit on Tuesday after it took impairments on Nigerian and Indonesian operations.

The company also said it expected to complete a 3.9-billion euro purchase of Paris-listed Vivendi's 53 per cent stake in Maroc Telecom, plus 300 million euros in 2012 dividends from the Moroccan firm, by end-May.

Etisalat, operating in about 15 countries across the Middle East, Africa and Asia, made a net profit of Dh1.45 billion ($394.77 million) in the three months to Dec. 31, according to Reuters calculations.

Analysts polled by Reuters gave a consensus forecast of fourth-quarter profit of Dh2.17 billion.

Of the Dh1.37 billion in impairment charges, Dh516 million related to loans to affiliate Etisalat Nigeria, in which it holds a 40 per cent stake, with Dh506 million relating to its 4.2 per cent stake in Indonesia's PT XL Axiata , Etisalat CFO Serkan Okandan said.

The Indonesian Rupiah fell 26 per cent against the dollar last year. The UAE dirham is pegged to the dollar.

Etisalat's foreign operations accounted for 33 per cent of Etisalat's revenue in 2013, up from 28 per cent a year earlier after unit Pakistan Telecommunications Co (PTCL) was included. The UAE firm treated PTCL as a subsidiary from 2013.

"Since international subsidiaries are growing faster than the UAE, we're expecting that to improve by a few (per centage) points," said Okandan.

MAROC TELECOM DEAL BY END-MAY

As part of that overseas expansion, Okandan told Reuters that the Maroc Telecom deal, agreed in November, should go through before the end of May, as long as regulatory approval from the countries where the firm operates was forthcoming.

Former monopoly Maroc Telecom, whose annual profit fell 17 per cent to 5.54 billion Moroccan dirhams last year, also has operations in Gabon, Mauritania, Burkina Faso and Mali.

That approval was likely to be a formality in most places, telecom analysts said, although Gabon may be more complicated because Etisalat owns Gabon operator Moov.

Vivendi's chief financial officer, Herve Philippe, said last month that the sale of the controlling stake should go through in the coming weeks.

Okandan said Morocco's takeover rules require Etisalat to make a buyout offer for Maroc Telecom's minority shareholders, but declined to provide further details.

Rising foreign revenue came despite a 6.6 per cent decline in earnings from Egypt.

This was due to the falling value of the Egyptian pound, Okandan said, adding that in local currency terms its Egyptian revenue actually rose about 6 per cent.

Etisalat's 2013 full-year net profit rose to Dh7.08 billion from Dh6.74 billion a year earlier, according to a statement to Abu Dhabi's bourse.

The company had 148 million subscribers at the end of 2013, an increase of 9 million from a year earlier, Okandan said.

Annual revenue rose 18 per cent to 38.9 billion dirhams. Operating expenses climbed 26 per cent to 24.7 billion dirhams, which Okandan said was largely due to higher handset sales.

Handsets offer little profit margin, but Gulf operators are increasingly using smart phone sales to sign up customers to monthly contracts. People on such contracts usually spend more on telecom services and are less likely to switch providers.

Etisalat spent Dh6.3 billion last year on new licences and improving and expanding its networks, Okandan added.

The company proposed a cash dividend of 35 fils per share for the second half of 2014.

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