Etisalat mulls restructuring to cut costs

21 Feb 2012

UAE telecom operator Emirates Telecommunications Corporation (Etisalat) has said it is considering restructuring its operations to cut operating expenditures in the face of lower revenue and rising competition, Reuters reports. During a board meeting held in Abu Dhabi yesterday, Etisalat discussed the initiation of restructuring and outsourcing plans as a future strategy, in a bid to reduce and control operating expenditures. This, the company said, would help it face ‘rising costs of new technology necessary for organisations to increase their competitive edge in local and international markets, accompanied by [a] drop in revenues of the global telecom industry.’ Etisalat Group CEO, Ahmad Abdulkarim Julfar, added that the implementation of this strategy would give the Abu Dhabi-based firm ‘time, effort and financial benefits in achieving its main objective of offering advanced, high quality services to its subscribers in the face of the changing market conditions.’

Etisalat, which is 60% owned by the UAE federal government through the Emirates Investment Authority, operates in 17 countries in the Middle East, Asia and Africa. Earlier this month the company reported a 24% drop in annual net profit to AED5.84 billion (USD1.59 billion), after writing off investments worth AED3.04 billion in India. The move followed a decision by the Supreme Court of India to cancel 122 2G operating licences – including that of Etisalat DB (formerly known as Swan Telecom), in which Etisalat owns a 45% stake – at the start of the month. Etisalat generated revenue of AED32.2 billion in 2011, up 1% from the AED31.9 billion reported the previous year. Yesterday the board proposed a 60% dividend for 2011, the same as 2010.

United Arab Emirates, Etisalat UAE