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Telecom subscribers in the UAE declined by hundreds of thousands last year as the coronavirus pandemic took a toll on the economy.
The UAE’s major telecom operator, Etisalat, reported on Tuesday that its subscriber base in the country dropped by 366,000 (3 percent) to 12.2 million in the fourth quarter of 2020. Mobile subscribers fell 4 percent year-on-year to 10.4 million, mainly due to the decline in the prepaid segment.
In its statement accompanying its financial results, Emirates Telecommunications Group (Etisalat) admitted that its operations were impacted by the lockdown last year, with sales of mobile phones and uptake of prepaid and roaming mobile services falling at the same time.
Despite the challenges, the company ended 2020 with a consolidated net profit of 9 billion dirhams ($2.4 billion), up 3.8 percent year over year, and has recommended a special one-time dividend of AED0.40, bringing the total dividends for the year to AED1.20 per share, which represents a dividend payout ratio of 115 percent.
However, it noted that heightened macroeconomic risks will likely continue in the first half of the year, despite improvements in the company’s performance.
Impact
While it saw a decline in subscribers in the UAE last year, Etisalat reported that its subscriber base overall reached 154 million, up by 3.6 percent year over year. That’s 5.4 million additional subscribers, according to the firm.
The increase was due to a “strong subscriber acquisition” in Mali, Burkina Faso, Chad, Saudi Arabia, Togo and Benin. At the same time, the company’s post-paid segment grew by 5 percent.
Consolidated revenues for the fourth quarter reached 13.1 billion dirhams, up by 2.1 percent year over year. Earnings during the period also went up by 0.4 percent to 6.3 billion dirhams.
“The Group’s operations were impacted as a result of the temporary lockdown measures. This affected the way in which business was conducted while also putting pressure on the Group’s revenue, as stores were forced to close,” the company said in a bourse filing to the Abu Dhabi Securities Exchange.
“The mobile prepaid segment and the sale of handsets were negatively affected by mobility restrictions. Similarly, roaming revenue was impacted by the imposed travel ban,” it added.
Still a positive year
Nevertheless, Etisalat demonstrated resilience and agility last year, according to Group chairman Obaid Humaid Al Tayer.
“Despite the unprecedented global impact of the COVID-19 pandemic, Etisalat demonstrated robust financial performance, driven by our bold vision to constantly innovate while ensuring that communities we serve remain connected, informed and productive,” Al Tayer said.
“Etisalat Group is well positioned for the future and we are confident in our ability to maintain our exceptional performance,” he added.
According to Hatem Dowidar, chief executive officer of Etisalat Group, the company will “remain in a strong position” compared to its global peers and other industries. Moving forward, he said the deployment of 5G will continue.
“There is considerable untapped potential and opportunities in the areas of cloud, IoT and cybersecurity, which are expected to fuel future digital growth and rebalance telecom revenues,” he said.
Operational excellence
“We will remain focused on improving operational excellence across our footprint, rationalise our portfolio and enrich it with assets that maximise the return on investment for our shareholders and added value for our customers. Moreover, 5G deployment will continue and unlock new business opportunities.”
Etisalat also noted that things started to improve during the third and fourth quarter of 2020, when restrictions eased and commercial activities improved.
“However, due to weaker macroeconomics that continued to pressure consumer and corporate spending, they remained below the pre-COVID-19 levels,” it said.
Despite the improvement in recent months, the overall performance “remained below what they were pre-COVID”.
“Heightened macroeconomic risks will likely persist, continuing in the first half of 2021,” it added.
(Reporting by Cleofe Maceda; editing by Mily Chakrabarty)
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© ZAWYA 2021
