The United Arab Emirates cabinet amended Etisalat’s articles of association so foreigners can invest in the operator, but the government will keep a veto over key decisions.
Foreign investors can hold shares but will have no voting rights, folllowing the change. “Non-UAE natural and legal/judicial persons”, who will be able to own up to 20 per cent of the group’s shares, “shall not hold any voting rights in the group’s general assembly (however holders of such shares may attend such meetings),” it said in a statement.
The operator also said it may “establish a share buyback programme” at any time subject to the approval of the Emirates Securities and Commodities authority.
The move to change Etisalat’s status was flagged up earlier this year.
The statement added that the federal government, which owns 60 percent of Etisalat through sovereign wealth fund Emirates Investment Authority, will keep control over major strategic decisions at the UAE’s former telecom monopoly: “a special share shall be issued to the federal government which will grant it certain rights with respect to approving and vetoing key decisions of the group”.
This includes approving mergers, allowing for the participation of a strategic investor, spinning off part of its commercial activities, approving ownership of more than 5 per cent of the group’s share capital by any shareholder and allowing the government’s shareholding to drop below 51 per cent.
Etisalat may also, subject to the approval of its “special shareholder”, establish a new operating company for the purpose of operating its telecom network business and providing telecom services to the UAE.
It will convert to a public joint stock company from a corporation and its name will be amended to Emirates Telecommunications Group Co from Emirates Telecommunications Corp.
The company said it has one year from the amendment of the federal law to implement the agreed changes.
In Q2 2015, Etisalat took a heavy fall, with the blame pinned on higher depreciation and amortisation charges, the impact of affiliate Mobily’s woes, higher net finance costs and foreign exchange losses.
While the profit attributable to equity holders (net profit) fell by 39 per cent to AED1.53 billion ($417 million), the group delivered a cheerier message with a six per cent growth in revenue to AED13.3 billion.