Emirates Telecommunications Corporation (Etisalat) posted a 20 per cent rise in fourth-quarter profit by adding new mobile phone users at home, but missed most analysts' forecasts as it continued to expand abroad.
Etisalat, which operates in about 16 countries, made Dh1.76 billion in the three months to December 31, up 19.7 per cent from a year earlier, Reuters calculated based on full-year data released by the company.
The quarterly profit missed four of five analysts' forecasts in a Reuters survey last month, which ranged from Dh1.61 billion to Dh2.03 billion. The average was Dh1.83 billion dirhams.
Although Etisalat's revenues jumped and its number of users continued to grow, it has been spending to expand abroad after it lost its home monopoly in February when rival du started operations.
The second-largest Arab telecom operator by market value, Etisalat also announced a 10 per cent pay rise from November to help retain staff.
"The margins will be squeezed in the short-term as Etisalat expands into new markets, especially in Egypt," said Marise Ananian, a telecom analyst at EFG-Hermes investment bank.
"Growth of mobile phone users in the UAE was strong as we expected, which have helped offset the impact of losses at the start-ups level," she said.
Etisalat had 6.4 million mobile phone subscribers in the UAE at the end of December compared with 6.2 million on September 30, indicating a net addition of 200,000 in the three-month period, on a par with previous quarters.
Revenue jumped 31 per cent to Dh21.34 billion in the year, said Etisalat, which did not give a breakdown of costs, which could have risen as it expanded in countries including Egypt, Pakistan and Afghanistan.
Etisalat Egypt, in which the Abu Dhabi-based firm owns 66 percent, had planned to make its first profit in five years of starting operations in May, but would likely beat that target, its Chief Executive Salah al-Abdooli said in September.
Etisalat's 35 per cent Saudi affiliate Etihad Etisalat (Mobily) surpassed fourth-quarter profit forecasts as it expanded services in a market close to saturation.
The firm has secured 40 per cent market share in the largest Arab economy since starting operations in 2005. In Egypt, Etisalat wants 10 million subscribers by 2010.
Asia is also figuring prominently in Etisalat's expansion plans.
The operator, which lost out on bids in Kuwait and Qatar last year, said in December it would buy 16 per cent of PT Excelcomindo Pratama Tbk for $438 million to enter Indonesia, the world's fourth most-populous country.
The operator posted profit attributable to shareholders of Dh7.297 billion, or Dh1.46 per share, in 2007 compared with Dh5.86 billion, or Dh1.17 per share, in 2006, it said in a statement.
Etisalat's shares, which have risen in the last three trading days, fell 2.24 per cent on Monday before the results were released. (Reuters)
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