UAE’s Etisalat Q4 profit surges but misses forecasts

Abu Dhabi-listed Etisalat posted a 47 percent jump in fourth-quarter profit on Thursday as its purchase of a majority stake in Maroc Telecom and lower taxes and impairment charges boosted its bottom line, although it missed analysts' forecasts.

The United Arab Emirates telecommunications company, which operates in 19 countries across the Middle East, Africa and Asia, posted a net profit of 2.14 billion dirhams ($582.7 million) in the three months to Dec. 31.

This compares with a profit of 1.45 billion dirhams in the year-earlier period.

Three analysts polled by Reuters on average forecast Etisalat, the Gulf's second biggest telecommunications operator by market value, would make a quarterly profit of 2.43 billion dirhams.

Etisalat made an annual net profit of 8.89 billion dirhams in 2014, up from 7.08 billion dirhams a year earlier.

It paid 5.33 billion dirhams in royalties – or tax – to the UAE federal government last year. That compares with royalties of 6.12 dirhams in 2013.

The company attributed its increased profit to higher earnings before tax, interest depreciation and amortisation (EBITDA), plus lower taxes and impairment charges.

Weighing on its bottom were higher depreciation and amortisation expenses, lower earnings from associates, higher finance costs and foreign exchange losses.

Full-year revenue was 48.77 billion, up 26 percent on 2013, and of which 27.1 billion was from the UAE.

Fourth-quarter revenue climbed 33 percent to 13.04 billion dirhams; 7 billion was generated domestically.

Etisalat's total subscriber rose 14 percent year-on-year to 169 million, mainly due to its acquisition of Marc Telecom, which contributed about 40 million subscribers.

The company's Saudi Arabia affiliate Mobily in November cut previously announced profits for 2013 and the first half of last year and then reported a full-year loss for 2014 when its audited results were announced on Wednesday. It originally said it made a small profit in 2014.

Etisalat described the "resulting impact" from Mobily as "immaterial" in its earnings statement.

The company proposed to pay a 0.35 dirham per share cash dividend for the second half of 2014, matching its dividend for the year-ago period.

For all of 2014, its dividend will be 0.70 dirham per share and 10 percent in bonus shares.

Etisalat also proposed upping its share capital to 10 billion dirhams from 8 billion dirhams. It did not state how it would achieve this and it is unclear if this includes the bonus share issue.

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