First quarter revenues for telco operator Etisalat are up in its African, Middle East and Asian markets but down in its home market of the United Arab Emirates (UAE), as the company faces stiff local competition.
Strong performance in international markets - particularly Saudi Arabia, Egypt, Afghanistan and Nigeria - accounted for 21% growth in revenue year-on-year for the quarter ending March 2012. Total international revenues for the operator, which is listed on the Abu Dhabi Securities Exchange, for the first quarter this year was $619 million.
Meanwhile, Etisalat's total UAE revenues fell from 1.7 billion in the same quarter last year to $1.65 billion this year. But the total consolidated revenues for Etisalat recorded an increase of 2% year-on-year to $2.23 billion.
The recorded group net profit after federal royalty for the company was also $492 million for the three month period ended 31 March 2012.
Etisalat’s fall in local revenues comes as du, the UAE’s second operator, has increased its market share in that country. Du, founded in 2006, has a 46% of the UAE market, according to the company.
“While total international revenues have increased, there has been a small decline year-on-year in UAE revenues, so that shows that they are continuing to struggle really in the face of competition with du in their home market,” said Matthew Reed, a senior analyst for Informa Telecom & Media Middle East and Africa.
“And the International revenues only account for relatively small proportion of overall revenues,” Reed added.
Increasing international growth is a strategic focus for Etisalat, especially as it faces tougher competition in the UAE, which has an estimated population of 7.5 million according to the World Bank.
The company says the number of its global subscribers increased by 34 million year-on-year to 169 million.
But maintaining this growth trajectory and launching operations in more countries is set to be tough moving forward.
Reed says markets such as those in Africa are maturing and have fewer licenses to offer.Nevertheless, executives at Etisalat remain up-beat about their global operations.
“While competition has eroded margins on voice services in our home market, our view of the telecommunications industry is that growth will continue to come from the emergent, international markets and higher margin services,” said Ahmad Abdulkarim Julfar, group chief executive officer for Etisalat.
“Already we are seeing diversification of our revenues by services and geographies and less reliance on the UAE market,” he added.
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