Etisalat and du shares surge in plan to boost foreign ownership limit found in stocks
19 January, 2021
Shares of Etisalat and Emirates Integrated Telecommunications Company, also called du, jumped a lot more than 14 per cent following the telecommunications operators said they are thinking about an increase in the foreign ownership limit within their stocks.
Etisalat, the biggest telecoms company in the UAE, soared 14.5 per cent to Dh20.72 per share in 12.47pm UAE time on Tuesday, boosting the Abu Dhabi Securities Exchange standard index almost 3 per cent higher.
Du's shares surged 14.6 % to Dh6.69, lifting the Dubai Financial Market General Index higher by 1.5 per cent.
Du's board might meet on January 20 “to consider the increase in the ownership percentage of non-UAE citizens found in the company’s shares”, it said in a good regulatory filing.
Etisalat's board can be meeting on a single day to consider a rise in foreign ownership limit found in its shares, it said in another bourse filing to the ADX.
Industry analysts said the maneuver will “yield a good outcome” and is based on the UAE’s "efforts to attract fresh investment in to the economy”.
It is “a big positive for both the corporations and the UAE telecom sector on the whole as it will attract not only monetary capital but also other non-monetary advantages want technology transfer and human capital bottom”, Vijay Valecha, chief investment officer in Century Financial, told The National.
Announcements by both telecoms operators follow the UAE's commitment to permit foreigners to possess 100 per cent of business across industries, Mr Valecha said.
“Etisalat and du had first of all exposed for foreign ownership found in 2015 with a 20 % limit cap … the maneuver is likely to offer both these stocks deeper industry access and liquidity flows,” he added.
Both Etisalat and du have performed strongly this past year with gains of 8 % and 10.56 %, respectively, Mr Valecha said.
“Opening the market to foreign owners is usually [a welcome approach] and the fact is that Etisalat can be a major network supplier, the strongest one ... hence, we consider the company’s strategy will probably yield an excellent outcome,” Naeem Aslam, chief industry analyst at brokerage Avatrade, told The National.
Using its headquarters in Abu Dhabi, Etisalat was established over four decades ago in the UAE as the country’s first telecommunications company. It offers services to 149 million subscribers in 16 countries over the Middle East, Asia and Africa.
Sixty % of the company is owned by Emirates Investment Authority, while the remaining is floated on the ADX with the existing foreign ownership limit fixed in 20 % of the show capital, in line with the telco’s website.
In October, it reported a 6 % year-on-year rise in third quarter net profit to Dh2.4 billion and a 0.5 % rise in revenues to Dh13bn.
Founded in 2005 since the UAE’s second certified telecommunications provider, EITC is normally 50.12 % owned by EIA, 10.06 per cent by Mubadala and 19.7 % by Emirates International Telecommunications, with the public owning remaining shares.
Its net profit for the 90 days to the end of September 30 surged to Dh824m.
Several banks on the UAE, the next most important Arab economy, have increased foreign ownership caps on their stocks to attract extra external investors following the country eased its foreign ownership limit restrictions.
In June, Commercial Lender of Dubai, which counts Investment Corporation of Dubai as its biggest shareholder, set a foreign ownership limit of 40 per cent of its stocks. In March, Dubai Islamic Bank's shareholders as well approved a rise of its limits to 40 % from the previous 25 per cent.
First Abu Dhabi Lender, the largest lender in the country, Emirates NBD and Abu Dhabi Islamic Lender also have sought shareholder approval to lift their caps about foreign ownership.
Source: www.thenationalnews.com
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