Dubai Shares in etisalat climbed to a more than three-week high yesterday after the telco proposed a 60 fils per share dividend for 2011.

The telco, which also says it may restructure its operations to cut costs, gained 2.15 per cent to Dh9.53 on Abu Dhabi's bourse following the announcement.

Etisalat posted a 23.4 per cent slump in full-year net profit earlier this month after writing off the value of its Indian operations, which were affected by the cancellation of licenses issued in a 2008 sale at the centre of a major corruption scandal.

In line with profit

"Etisalat's dividend is quite unexciting and more or less in line with its operating profit, which was also pretty flat," said Ebrahim Masoud, senior investment officer at Mashreq bank.

"However, most investors look to etisalat as a good value investment and from their perspective it is good news to have some confirmation that the company's dividend payment is intact.

"Etisalat has an underleveraged, cash-rich balance sheet and its dividend payout will likely maintain the status quo for the next few years. Investors voted with their money yesterday as etisalat's stock performed well," he added.

The telco, which operates in 17 countries, says its financial position remains solid with a net cash balance of Dh3.3 billion at the end of 2011. However, the company's full-year profits for 2011 were hit by the Dh1.02 billion impairment it booked on the cancelled licenses in India.

"After the provisioning they took for their Indian unit, some investors were worried the dividend could have been lower than that of last few years because of that issue but it has turned out to be untrue, and this explains the two per cent increase in today's share price," said Omar Maher, an equity research analyst at EFG-Hermes.

"Etisalat's dividend is exactly in line with expectations; it is similar to what the company has been paying for the last few years. The only key thing to note is that, like last year, there were no bonus shares issued as part of the dividend payout," he added.

Rising competition

The company has reported falling profits in seven of the past eight quarters amid increasing competition from du in its home market.

"Reported earnings for the year were noticeably impacted by the Supreme Court of India's recent decision to cancel 122 licenses including that of our Indian subsidiary Etisalat DB," said etisalat's chairman Mohammad Hassan Omran in a statement.

Finance: $2b loan being sought

Etisalat is seeking as much as $2 billion in a syndicated loan for general corporate purposes, according to four bankers familiar with the matter.

No price has been indicated for the three-year loan, the bankers said, declining to be identified because the information is private.

Banks have submitted bids, although a decision on the loan has been delayed because the interest rate offered by lenders varies widely, one of the bankers said.

A spokesman for the phone company could not be reached.

— Bloomberg