Etisalat stake sale in Indonesian operator aimed at consolidation

Abu Dhabi: The Emirates Telecommunications Corporation (etisalat) on Wednesday announced that it has finalised the sale of a 9.1 per cent stake in PT XL Axiata Tbk), an Indonesian mobile telecommunications provider. The sale of the 775 million shares to institutional investors capitalised on the recent rally in XL Axiata’s stock price and resulted in gross proceeds of Dh1.87 billion to etisalat. In an interview with Gulf News Ahmad Abdul Karim Julfar, Chief Executive Officer of Etisalat Group speaks about the strategy behind the transaction.

Why are you selling the Axiata stake?

Etisalat is a minority shareholder in XL, we owned 13.3 per cent only out of the totall shares of the company. In line with our group strategy of consolidating our assets and crystalise the value creation for our shareholders, we believe now is the right time to sell our interest in XL for etisalat’s Shareholders. Etisalat successfully offloaded its part stake at approximately 7 per cent higher than the 6-month average trading price. Etisalat will continue still hold a 4.2 per cent ownership stake in XL

When do etisalat entered the Indonesian market and why?

Indonesia is one of the most attractive market in Asia. In December 2007 etisalat took a 15.97 per cent stake paying Dh1.6 billion. Etisalat eventually acquired 1.132 billion shares in XL. The 775 million shares represent a total of 9.1 per cent of XL’s issued share capital, representing a value of approximately Dh1.87 billion before commission and expenses. However we consider this investment as sound strategy that has seen our profits grow over the past quarter, up 17 per cent year-on-year. One of our key targets is to be involved in a profitable business for our investors, help the markets we are involved in grow, and add value to customers and the communities that we are serving.

Etisalat recently returned to profits growth, what are the challenges ahead?

I would classify it as a period of consolidation during which we have invested in network infrastructure across our 16 operations. Second quarter results show encouraging signs as we follow our strategy of consolidation — maximising the value of the assets that we have — and diversification — building partnerships and delivering innovative solutions that utilise our networks investments to deliver high speed data.

Where are you from the data tsunami?

The data tsunami — will become the main revenue driver for the Group and help drive economic growth and social development in the markets in which we operate. Over the first half of this year, we had growth of Dh3.67 billion and we have diversified our revenue to key markets growth markets have been KSA, Nigeria, Pakistan, Egypt. We have seen signs of stabilisation in the UAE over previous quarters, largely due to the service that we have been providing, such as customer service, Data (eLife and mobile), and the general UAE economy improving. International expansion and the explosion of digital services mean that telecommunications companies like etisalat are assessing the value and the opportunity of the assets they have acquired, while simultaneously investing in innovation. This is an era of consolidation and diversification.

What is the latest on etisalat’s strategy of upping stakes in its foreign operations?

The last decade has seen telcos — not just in the region but internationally — make a “land grab” for footprint in new markets. I believe that era is over and we are focusing on maximising the value of those assets we have acquired. We can extract more value by delivering innovative solutions to improve the quality of life for individuals, make businesses more efficient and help governments provide a greater range of services more simply. Look at our world leading developments in mCommerce — Nigeria — and mHealth — Tanzania.