DUBAI, 29 May 2005 — UAE telecoms group Etisalat must either increase its capital or float its international business on the stock market to fund a rapid expansion drive, a senior company executive said.
Cash from its lucrative domestic monopoly and a surge in its share price have helped fuel the state-controlled company’s expansion beyond the United Arab Emirates.
Its acquisition of 50 percent of Atlantique Telecom last month added six West African states to its operations and it is in the running to buy control of the dominant state telecoms companies in Turkey and Pakistan.
Etisalat Senior Executive Vice President Obaid Saeed ibn Mes’har told Reuters in an interview in Dubai that he wanted to enter four more countries in West or Central Africa by the end of the year.
“I think Etisalat ... has either to increase its capital to meet the rapid expansion in the telecom industry or to float Etisalat International as a public company in order to raise funds to meet these requirements,” Mes’har said. He said the company was now also looking at North Africa as a potential avenue for expansion.
“For North Africa I have a plan but ... because of the slow privatization of the (telecom companies there) it might take time.” He did not say which countries he was targeting.
On Tuesday, the UAE firm’s Saudi Arabian venture Etihad Etisalat launched a mobile phone service, ending a monopoly in the Kingdom’s cellphone industry.
Etihad Etisalat plans to carry out a capital increase worth “close to” $530 million, Mes’har said, but is waiting for the approval of Saudi capital market authorities before going ahead.
“We are looking for similar to the service quality in the UAE. To have that quality you need to heavily invest in the country.”
Etisalat is 60-percent owned by the state and 40 percent by the UAE public. Its shares traded in Abu Dhabi have almost doubled this year as surging oil prices help feed an infrastructure boom in the UAE, swelling the company’s profits.
Mes’har said Etisalat would have no problem raising the capital it needs and pointed to the Dubai International Financial Center (DIFC) as an appropriate platform for a listing of the company’s international business.
DIFC aims to sign up the world’s top investment banks as members of its stock market, the Dubai International Financial Exchange (DIFX), by the time it opens in late September and will set regulatory standards on a par with London or New York.
“The good thing with DIFC ... is that I can bring my international operation to be traded here,” Mes’har said.
Etisalat is among eight groups shortlisted to bid for a 26 percent controlling stake in Pakistan Telecommunications Co. Ltd. and Mes’har said a meeting in Pakistan on Wednesday had resolved “a lot of doubts” among the bidders.
The UAE firm also wants to buy a 55 percent stake on offer in dominant Turkish fixed-line service provider Turk Telekom and has joined with Cetel Calik Enerji and Dubai Islamic Bank to make a bid.
Earlier this month, the Turkish privatization authority extended the deadline for formal offers for the stake, which analysts say may be worth several billion dollars, to June 24 from May 31.
“I am the only operator who didn’t ask for any extension for Turk Telekom,” said Mes’har.
“We are ready. Everything is arranged. Due diligence is completed and valuation is ready.”
