Net profit at UAE-based operator group Etisalat took a heavy fall in Q2 2015, 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.
Ahmad Julfar, group chief executive officer. said the revenue increase was an indicator that “Etisalat’s long-term strategy for sustainable growth in our markets is the right approach” despite the heavy profit fall.
The group benefited from domestic revenue uplift of nine per cent to AED7.28 billion, thanks to a growth in postpaid mobile subscribers and the numbers joining Etisalat’s eLife package of double and triple-play services. Etisalat also enjoyed a consolidation impact from Maroc Telecom.
Tougher news came from the bottom line which was impacted by a number of factors which drove up operating expenses. The group made a loss of AED207 million on foreign exchange transactions, compared with a profit of AED172 million in the same period in 2014. Etisalat’s operations in Nigeria was a main culprit as a strong operational performance was undermined by adverse currency movements.
In addition, depreciation charges rose 11 per cent to AED1.41 billion and amortisation charges increased by 55 per cent to AED448 million.
There was also the negative impact from Mobily, Etisalat’s troubled affiliate in Saudi Arabia which said in June it would restate past earnings, following accounting errors. Etisalat warned last month that Mobily’s restatement would hit its own 2015 net profit by AED204 million.