Stock - e&
Of late, e& has consistently expanded its base in the technology services vertical. Simultaneously, it's also taking a more global outlook on telecom-related investments. Image Credit: Supplied

UAE tech group e& solidified its position as having the most valuable portfolio of telecom assets within the MEA region, according to Brand Finance. The consultancy group estimated e&’s telecom brand value at above $14 billion and was recognised as the third top telecom brand in the world with a rating of AAA.

It’s hard to fathom that a single share of Etisalat was trading at Dh4 in 2003; cut to today, when it has grown more than 6x. The stock stands at Dh25.6 with a market cap of Dh222.5 billion. The key to e&’s progress relies on an all-encompassing strategy, which targets strengthening its core by capitalising on a solid market positioning, tapping into adjacent digital and consumer services, and optimising its portfolio while maintaining efficiency and agility.

Business model evolution

The group has transformed from a primarily telecom service provider to a technology and digital investment conglomerate. Under its four major pillars (telecom, e& life, e& enterprise, and e& capital), the group offers innovative digital solutions, smart connectivity and next-generation tech. The establishment of ‘e& enterprises’ is crucial to stay cognizant of cutting-edge technology. Moreover, from a commercial standpoint, the digital transformation-centred segment has enabled the group to derive value through end-to-end cybersecurity, the cloud, Internet of Things, and AI-based government and corporate projects.

The future leans towards services that provide wholesome and seamless customer experience. Therefore, developing adjacent services is likely to be the source of e&’s competitive advantage in years to come.

Underlying figures

The number of e& subscribers in the UAE surged 11 per cent year-over-year to 13.3 million at the end of Q3-2022, while the total number of subscribers reached 162 million, a 4 per cent lift. The consolidated revenues reached Dh13 billion, an increase of 5.5 per cent at constant exchange rates. The revenue was supported by growth in mobile, data package plans, and expanding digital services.

Despite the inflationary headwinds and exchange rate volatility, the consolidated EBITDA stood at Dh6.7 billion, a 6.9 per cent increase at constant currency. This implied an EBITDA margin of 52 per cent and was achieved through effective cost management.

During the nine months to September last, the group maintained strong liquidity in its balance-sheet with cash and cash equivalents amounting to Dh26 billion, representing almost 12 per cent of market cap. The group maintains a stable capex/revenue ratio to reinforce network modernization.

Prospects, short- and long-term

e&’s historical performance and current endeavours instil confidence in a sustainable outlook. The group has undoubtedly demonstrated its agility and dedication to capitalising on opportunities. There is the introduction of ‘e& universe’, its virtual world to explore the Metaverse opportunities further and the launch of a $250 million venture capital fund under its e& capital umbrella to boost the tech ecosystem through significant investments.

The group is a solid investment for investors seeking a fundamentally sound and tech-focused business. The 12-month dividend yield stands at 3.13 per cent.