Etihad Etisalat Co announces interim financial results for period ending on 30-06-2014 (Six Months)

July 22, 2014 9:16 am

The revenues of the first six months totaled SR12,227m, compared to SR11,553m for the same period of last year, with an increase of 6%.The gross profit of the second quarter totaled SR3,088m compared to SR2,975m for the same period of last year, with an increase of 4%. The gross profit margin of the second quarter has increased to 52% compared to 50% for the same period of last year. This increase comes as a result of the improved revenue mix. EBITDA margin for the second quarter registered 35% compared to 39% for the same period of last year, and 36% compared to the previous quarter. The net profit for the second quarter is SR1,312m, compared to SR1,611m for the same period of last year, with a decrease of 19%, and compared to SR1,400m for the previous quarter with a decrease of 6%. The reason of this decrease came as a result of writing off SR338.7m of the net profit for the second quarter that had been recognized in net profit for the first quarter. Earnings per share for the first six months reached SR3.52 in comparison to SR3.83 for the same period of last year.

The increase of the first six months revenues came as a result of increase in data revenues, both fixed and mobile, through the sales of distributors and operators through wholesale contracts and Capital leases both medium to long term. This has contributed to higher receivables for the company, and achieving non-recurring revenues. The company shall continue to seek to increase sales of distributors and operators.

The company put in its strategy to accelerate the pace of spreading broadband services that carry high profit margins, by not relying totally on traditional methods in selling and providing these services, which will have a positive impact on the future revenues and profits of the company, especially with the growing demand for broadband services that have created new investment opportunities. The company has innovated new products that are sold in wholesale featuring recurring revenues which fall under the medium-term contracts, while the long-term contracts do not carry recurring revenues, given the importance of accelerating the return on investment (Payback Period), and drawing the attention to the risks of wholesale sales contracts and Capital leases. The company has prepared a mitigation plan to limit these risks. This comes in line with the aim of accelerating the deployment of broadband services in various regions of the Kingdom. It should be noted that data revenues totaled 39% of the total revenue of the company for the first six months, compared to 27% for the same period of the previous year. The number of homes covered through the fiber-optic network (FTTH) reached 850 thousand homes distributed over 18 cities in the Kingdom. Fiber-optic sales increased by 89% for the first six months compared with the same period of the previous year. The launch of interactive TV services accompanied with 2014 World Cup TV channels packages contributed to this growth. The revenues of business sector services including ICT services increased for the first six months compared with the same period of the previous year.

The company strategy focuses on information and communications technology (ICT) and on broadband, both fixed and mobile, and on creativity and innovation. The company began its strategic transformation in order to become an integrated telecom company in the field of telecommunications and (ICT), and accordingly concluded strategic partnerships with international companies such as IBM, Accenture, Cisco, Virtue Stream and other companies to provide business solutions. In addition to accelerating the building of data centers where the company provides today advanced cloud services.

Engineer Abdulaziz Alsaghyir, chairman of the Board of Directors said that the company is currently considering the available options after the cessation of negotiations with Atheeb (GO) in respect of the acquisition, and that the company continues in its Transformation program which started in 2013. On the other hand, Engineer Alsaghyir stated that the company has signed a contract with the Canadian export credit agency – Export Development Canada (EDC), to obtain a long term vendor financing for $200m with no corporate guarantee. The purpose of the Shariah-compliant financing is to acquire telecommunications equipment from Alcatel-Lucent to upgrade/enhance the network.

Engineer Alsaghyir concluded that the Board of Directors in its meeting convened on 21/07/2014 has decided to distribute preliminary dividends amounting to SR962.5m for the second quarter of 2014, equivalent to SR1.25 per share, and representing 12.5% of the nominal value of the share. Eligibility will be for the shareholders registered in the records of the company by the end of the trading day 24/07/2014. The payment of dividends will be effective from 11/08/2014 and shall be transferred it directly to the bank accounts linked to shareholders investment portfolios via Al Rajhi Bank.