Stock - du chairman Malek Sultan Rashed Al Malek
Tecom can take on the challenge of hybrid working and keep generating continued demand for its offices and land, says Malek Al Malek, Chairman. Image Credit: Twitter

Dubai: The Tecom Group operates a business model that will be resilient to global companies making do with hybrid working ways for their workforce.

“We have a tenant retention rate of 87 per cent,” said Malek Al Malek, Chairman of Tecom Group, citing Dubai’s credentials as a ‘Covid-resilient city’ also helped with the growth the Group put in over the last two years.


Within two of its flagship hubs – Dubai Internet City and Media City – Tecom hosts a sizeable number of global tech and digital media entities. The thinking is that if these tenants stick with a mix of office and work-from-home flexibility, these businesses will need less space.

Elon Musk, for one, does not see it that way, pointing out – helpfully – in a mail to Tesla employees that those who do not show up will be presumed to have left the company. Other tech heavyweights too have weighed in with similar thoughts, if not with the same sharpness of tone.

Fit-to-purpose HQs

Al Malek reckons that Tecom and its 10 entities – 9 free zones among them – will be able to cater to a significant part of the demand for offices and more that businesses looking to Dubai will need. In particular, he says that new office spaces in Dubai will only grow ‘1-1.2 per cent’ in new office space supply, which would then feed demand right into Tecom’s hubs such as Dubai Design District, Production and Studio cities, and others.

We are awaiting the special regime expected for companies that sit in free zones (on the UAE Corporate Tax from June next year). We await more details.

- Malek Al Malek of Tecom Group

Then there is the ‘built-to-suit’ services that Tecom offers to global companies seeking regional HQs in Dubai. The programme has already seen Meta, Visa, Microsoft and Mastercard sign up.

Not all about tech, digital

Within the Tecom portfolio, there is a relatively more traditional hub – Dubai Industrial City. In these two years, the hub has drawn significant interest from manufacturers/tenants from the F&B space, light-to-medium enterprises, automotive and even in personal-care.

Al Malek said there has been a ramp up in land-leases – of 30-50 years - at Industrial City, “but we have had similar growth on our commercial assets too if you include the build-to-suit (contracts) in the last three, four years.”

There is also the Dubai Science Park, which is tuned more towards pharmaceuticals and life sciences when it comes to tenants.

The Tecom numbers that matter
• In 2021, the Tecom Group revenues were Dh1.77 billion, with EBITDA at Dh1.17 billion. The EBITDA (earnings before interest tax depreciation and amortisation) margin works out to a ‘healthy’ 66.3%.

• The EBITDA margins have held steady at least 66% in each of the last three years.

• The Tecom Group generated Dh1. billion of funds from operations in 2021 ‘supported by stable cashflow generation from investment properties’.

• There has been a ‘stable and resilient’ cashflow generation over the last three years, with 2021 recurring free cash flow of Dh798 million.

• The ‘cash conversion increased in 2021, indicating efficient working capital management and stringent cost discipline’.

IPO proceeds

On whether the funds raised from the public offer will be used to pay down debts, the Chairman said these will be used ‘address our expansion requirements’ and the rest handed over to the primary shareholder.

The IPO opens for subscription June 16, with retail investors allotted 9 per cent of the issue. For market watchers, the attention will be one who will sign up to be ‘cornerstone’ investors.

“The IPO offers investors a unique opportunity to be part owners of a company that is benefiting from Dubai’s attractive underlying macroeconomic, industry, and business dynamics,” said Al Malek. The confirmation of a Dh800 million payout for first three years will also have caught investor attention.

Among its 10 hubs, Tecom lists 7,800 tenants and who in turn have 100,000 professionals on their rolls.

Splitting the dividend payouts
- Tecom expects to pay the first interim dividend of Dh200 million in October and the second interim dividend of Dh200 million in April 2023, which pertain to the performance of the group in the second-half of 2022.

- Thereafter, interim dividends are expected to be paid in April and October each year for the remaining dividend distribution policy period of Dh400 million for each interim period.