Dubai: Further all-around occupancy gains for its business hubs across Dubai helped Tecom Group pull out a 20 per cent increase in nine-month 2023 net profit to Dh768 million from Dh639 million. Revenues came to Dh1.59 billion, up 7 per cent.
Tecom, which operates the Dubai Internet and Media cities as well the d3 cluster among others, can feel particularly pleased about the occupancy closing in on the 90 per cent level. It ended September at 88.5 per cent, a solid 5 per cent increase. Just as important, its customer retention rate was at 89 per cent by the end of the 9-month period. (Tecom's stock on DFM is up 15 per cent for the year to date, and is trading at Dh2.6.)
Which was the foundation for Abdulla Belhoul, CEO of Tecom Group, to be quite bullish. “Our 10 business districts are almost near full capacity, with our existing customers continuing to renew their leases with us and new customers coming on board,” he said.
“This is a testament to the strong demand for our quality assets and unique, fully-serviced strategic locations underpinned by buoyant business conditions. We will continue to focus our efforts on being the go-to destination for international and regional businesses.
“Our business model, which includes a balance between long-term and short-term leases, enables us to take advantage of rising prices while providing us with greater revenue stability and visibility.”
15 %The Tecom stock on DFM has been one of the pace-setters of the year, gaining a hot 15 per cent year-to-date
To keep the growth boiling, the plan is to raise additional capacities in Grade A storage and logistics, a commercial real estate sub-category recording sizeable demand. The Group will develop new facilities with a total GLA of 200,000 square feet in Dubai Science Park.
Our outstanding financial and operational performance reflects our ability to take advantage of Dubai’s favourable market conditions as we continue to successfully push ahead with our strategy of optimising our diverse portfolio and sustaining high occupancy rates
Pull down debt costs
Where Tecom has made clear headway is on managing its debt exposures. "The Group maintained a healthy debt profile with a loan-to-value (LTV) ratio of 14.2 per cent and a 7.1x EBITDA-to-interest ratio, driven by prudent financial management and continued hedging against rising interest rates," says a Tecom statement.
Market analysts agree - "Tecom has brought down their finance costs significantly from a year ago, and that's a clear win for the Group," said one. "That they managed to do so despite the prevailing high rate environment makes it all the more remarkable." (The statements show Tecom finance costs at Dh214 million and well down on the 9M-22 tally of Dh243 million.)