Aspire Forward
Annual Report 2014
Table of contents
Key Highlights of 2014
02
Business Snapshot 04
Chairman’s Statement 06
Board of Director’s 08
Our Journey 10
Chief Executive Officer’s Statement 12
Management Team 14
Etisalat Group Strategy 18
key events of the year
20
Operational Highlights 22
Etisalat Group’s Footprint
26
Management Review
Middle East
30
Africa38
Asia46
Head Office:
Etisalat Building
Intersection of Zayed The 1st Street and
Sheikh Rashid Bin Saeed Al Maktoum Street
P.O. Box 3838
Abu Dhabi, UAE
Regional Offices:
Abu Dhabi, Dubai, Northern Emirates
Awards
52
Human Resorces 54
Corporate Social Responsibility
56
Corporate Governance
58
Independent Auditor’s Report to the Shareholders 60
Consolidated Income Statement 62
Consolidated Statement of Comprehensive Income 63
Consolidated Statement of Financial Position 64
Consolidated Statement of Changes in Equity
65
Consolidated Statement of Cash Flows 66
Notes to the Consolidated Financial Statements 67
Notice of General Annual Shareholders Meeting
116
Etisalat
01
Key highlights of 2014
48.8
23.4
AED
Billion Revenue
169
Million
Aggregate subscribers
AED
Billion EBITDA
8.9
AED
Billion Net Profit
8.9
AED
Billion CAPEX
70
Fils
Dividend per share
10
%
Bonus share
02
Annual Report 2014
Maroc Telecom Group
welcome to the Etisalat Family
Etisalat
03
Aspire Forward
Business Snapshot
Our business model is based on meeting our customers’
expectations through continued investment in our networks
to support wider coverage, higher speeds and greater capacity,
and to provide innovative service offerings
Our aspiration is to be the leading and
most admired emerging markets telecom
group by pro-actively and consistently
serving our customers with a common
set of brand values based on innovation,
customer centricity and building trusted
relationships. The key pillars of our strategy
reflect this desire. These pillars involve
owning and managing an attractive well
balanced portfolio of assets, providing
differentiated, innovative service offerings
that leverage our broadband infrastructure
and networks and superior customer
experience.
In line with our aspirations and strategy;
in the past year Etisalat completed its
acquisition of a 53% stake in Maroc
Telecom. This acquisition marks the largest
and most complex deal in the history
of Etisalat. It is one of the largest crossborder Mergers & Acquisition transactions
in the Middle East & North Africa region
and it expands Etisalat’s reach from fifteen
to nineteen markets. By combining our
assets in West Africa under Maroc Telecom,
we intend to establish the largest Francophone West Africa telecom Group.
Our business model is based on meeting
our customers’ expectations. We aspire
to achieve this through the continued
investment in our networks and innovative
service offerings to ensure we provide our
customers with the best possible experience
and to ensure that we continue with our
practice of high cash generation so we can
continue to reward our shareholders and
04
Annual Report 2014
grow our business. We have sustained a
generous dividend programme with close
to AED 17 billion returned to shareholders
in the past 3 years.
Over the years we have maintained a high
level of capital expenditure to support
wider coverage, higher speeds and greater
capacity in our networks. With over 169
million customers, we are one of the fastest
growing telecom operators with access to
close to 0.8 billion people in the markets we
operate in. The majority of our customers
and the growing share of our mobile
customers are in Africa and Asia. We
believe that voice is still a growth area that
we intend to tap into with the continued
upgrade of our networks; however, primary
focus is on securing leadership position in
the more lucrative data segment. To that
end, we have in the recent past invested in
spectrum licences in Pakistan, Afghanistan,
Benin and Cote D’Ivoire to support our push
into mobile data services and to support
future growth.
Our focus is on leveraging our technology
platforms to deliver innovative products
and services that offer both economic and
social benefits to our customers. We aspire
to transform the communities we operate
in, be it through enhancing financial
services access through products like
‘Flooz’, to healthcare and education. In the
UAE; we continue to make great strides in
technological advancements with over 85
percent of the population covered by LTE
and most recently we tested and deployed
LTE-A as well as showcasing 5G at GITEX
2014.
Etisalat is committed to being a responsible
global corporate citizen through strategic
partnerships that enhance access to
education and health care via use of
technology. These efforts are contributing
to bridging the gap in terms of access
within the communities we serve, while
generating impressive digital dividends in
the form of jobs, economic growth and
stability.
For nearly 40 years, Etisalat has helped the
UAE sustain its position as the region’s hub
for business, trade and foreign investment
by providing reliable and high quality
services. This was accomplished through
Etisalat investment in advanced world
class networks where both fibre-to-thehome (FTTH) and LTE roll-out exceeds
85% coverage of the population. Due to
these investment UAE today demonstrates
leadership in terms of regional technology,
innovation and deployment and leads the
world in terms of high-speed broadband
penetration. The country enjoys one
of the highest smartphone penetration
rates in the world with over 75 per cent
mobile consumers using smartphones.
In the coming years, Etisalat will play a
crucial role in driving innovative growth
in the multi-billion dollar UAE telecom
market, especially in the enterprise and
government sectors.
Etisalat
05
Chairman’s Statement
Innovation will continue to be at the heart of everything
we do at Etisalat
As we look forward to the year ahead,
it’s important to take stock of what an
auspicious year 2014 was for Etisalat. 2014
was defined by being “future ready” – we
experienced increased revenues and profits,
as well as the number of subscribers,
putting Etisalat in an excellent position
to engage the opportunities and changing
landscape of the coming year, even as the
industry continues to evolve in a profound
and challenging way.
It has become clear that the paradigm
shift we detected at the outset of 2014 is
now in full force. Telecommunications is
becoming ever more present in more areas
of life, and we strive to be at the forefront
of transforming ICT from its current role
as a set of service offerings to its future as
a total customer experience, and to deliver
access to as many people as possible. Our
current success is a result of understanding
the need our customers have to rely on
Etisalat to deliver.
The aspirations we put forth at the start
of 2014 have largely been realised – we
accomplished impressive growth, and with
this growth, fueled – and continue to fuel
– innovation in the industry. Our long-held
belief is that growth has to be accompanied
by constant attention to the innovation
that drives it. It is that synergy that is at the
heart of our continued success, which will
deliver an unmatched customer experience
that will lead to future growth.
Etisalat’s financial results are a great
benchmark of the aspirations set forth
in the beginning of the year. In 2014,
consolidated revenue grew by 26% to AED
48.8 billion, with net profit after Federal
Royalty increasing to AED 8.9 billion,
representing a 26% growth in the year. In
line with our strategy to create value for our
06
Annual Report 2014
shareholders, the Board has recommended a
dividend distribution of 70 fils per share for
the fiscal year 2014.
The milestone of acquiring Maroc Telecom
– one of the largest in the region’s history
– has added great value to Etisalat’s global
footprint. This acquisition has allowed us to
consolidate and begin to streamline services
for millions across North and West Africa.
As we aspire to be the leading emerging
markets telecom provider, we view this
acquisition as a critical investment in our
long-term future in Africa.
We have already begun to realise not only
the financial benefits, but also our ability
to enact real, transformational change
in local African communities through
enabling small businesses to grow, create
jobs, and deliver new innovative products
and services that will in turn foster vast
improvements in education, healthcare, and
many other socially vital initiatives.
Our growth in these emerging markets
secures long term success for Etisalat,
building trust within these communities
and allowing us to be the most reliable
partner in these markets when the time
comes to deliver the next round of
technological achievements. This long-term
commitment is what enables not only our
current success, but strengthens our ability
to prosper in the future.
Innovation will continue to be at the heart
of everything we do. Being “future ready”
means not only adapting to the changing
landscape, but to continue being the
agents of that change. For instance, the
development of Smart Cities will come
to define many functions of everyday
life. Aware of this fact, we have been
spearheading the development of 5G
technology in order to position Etisalat as a
driver for the technology that will deliver
the future of the industry.
2015 will be an important year in solidifying
the growth and gains of 2014. As we move
forward, Etisalat will continue to engage in
bold yet prudent investments to generate
value and profit for local communities and
shareholders alike. As with any enterprise
this large, challenges will arise. With so
many working parts, it can sometimes
be difficult act quickly to changes in the
marketplace, even when one is looking
to preempt them. Obstacles will emerge
– however I am confident that, given our
proven record of innovative solutions and
the skill and professionalism of our teams
across the Etisalat family, any challenges
will be overcome.
I would like to express my gratitude to
the leadership of the UAE, who have
unwavering supported Etisalat in our
journey to becoming one of the world’s
leading telecommunications operators.
And finally, most of all, I want to thank our
customers, for continuing to engage our
services with excitement and place their
faith in us to deliver time and again.
2014 was a watershed year for Etisalat,
having continued to establish ourselves as
a leading telecom operator at the forefront
of innovation. With the commitment
of our world-class employees across 19
operations, the continued support of our
investors, and the input and cooperation
of our millions of subscribers, 2015 will no
doubt continue this pattern of success.
Eissa Mohamed Al Suwaidi
Chairman - Etisalat Group
Etisalat
07
Board of Directors
Eissa Mohamed Al Suwaidi
Khalaf Bin Ahmed Al Otaiba
Chairman
Investment & Finance Committee
Vice Chairman
Member-Investment & Finance Committee
Sheikh Ahmed Mohamed Sultan
Bin Suroor Al Dhaheri
Abdulla Salem Al Dhaheri
Member
Audit Committee
Mohamed Hadi Ahmed Abdulla
Al Hussaini
Member
Investment & Finance Committee
Abdulfattah Sayed
Mansoor Sharaf
Member
Investment & Finance Committee
Abdelmonem Bin Eisa
Bin Nasser Alserkal
Member
Nomination & Remuneration
Committee
Shoaib Mir Hashim Khoory
Member
Nomination & Remuneration Committee
08
Annual Report 2014
Member
Chairman-Nomination &
Remuneration Committee
Mubarak Rashed Al Mansouri
Member
Nomination & Remuneration Committee
Investment & Finance Committee
Mana Mohamed Saeed Al Mulla
Member
Audit Committee
Essa Abdulfattah Kazim
Member
Chairman-Audit Committee
Hasan Al Hosani
Corporate Secretary
Etisalat
09
Our Journey
1994
The Middle East’s first
GSM service is introduced
in the UAE.
Etisalat launches Emirates
Data Clearing House, now
one of the world’s leading
clearing houses providing a complete
solution to GSM operators
to provide roaming
facilities to their
customers in turn.
1999
The ownership
structure changes
with the United Arab
Emirates government
getting a 60% share
in the company and
the remaining 40% is
publicly traded.
Etisalat acquires a stake
and takes management
control of PTCL, the
incumbent fixed
operator in Pakistan.
The Middle East’s first
broadband Internet
service using the latest
ADSL technologies is
introduced.
Etisalat expands into
West Africa by taking a
stake in Atlantique
Telecom with operations
in Benin, Burkina Faso,
the Central African
Republic, Gabon, Ivory
Coast, Togo, and Niger.
Etisalat buys stake in
Tanzanian operator
Zantel, its first step
towards becoming a
major international
telecoms group.
2012
Etisalat wins the third
mobile license in Egypt
and launches the
country’s first 3G
network .
Etisalat wins 3G
license in Afghanistan
and Ivory Coast and
launches the first 3G
services in
Afghanistan.
Etisalat awarded a
license to provide
mobile services in
Afghanistan.
Etisalat Services
Holding is formed to
manage eight business
units that offer
mission-critical
telecoms related
services to the
industry.
2009
Etisalat signs SPA with
Maroc Telecom for sale of
Etisalat’s shareholding
in Atlantique Telecoms.
Etisalat launches the
Middle East’s first 3G
network.
Etisalat becomes one
of the founding
investors in satellite
telecommunications
provider, Thuraya.
1982
1976
Etisalat completes
acquisition of 53%
shareholding in Maroc
Telecom.
Etisalat successfully
issued its inaugural bond
under its Global Medium
Term Note (GMTN)
programme listed on the
Irish Stock Exchange.
Etisalat acquires Tigo,
a Sri Lankan operator,
which is later
rebranded to Etisalat
Lanka.
2008
Emirates
Telecommunications
Corporation launches
Middle East’s first mobile
network.
2014
2003
1996
1983
2005
2006
2000
1995
Internet services are
rolled out across the
country, another first in
the region.
Etisalat introduces the
E-Vision brand for its
cable TV services.
2004
Etisalat wins the second
license to operate in
Saudi Arabia, introducing
Etihad Etisalat – Mobily.
Etisalat buys a stake in
Canar; a fixed line
operator in Sudan.
2007
Etisalat completes the
rollout of a nationwide
fibre optic backbone
over which next
generation services will
be provided in the UAE.
2011
Etisalat introduces 4G
(LTE) experience to its
customers in the UAE.
2013
Etisalat signed SPA with
Vivendi to acquire
Vivendi’s 53% stake in
Maroc Telecom Group.
Etisalat Benin obtains a
Universal Mobile
Service License.
Etisalat acquires a stake
in a green-field operator
EMTS in Nigeria, the
largest and fastest
growing market in
Africa.
Emirates
Telecommunication
Corporation is founded.
10
Annual Report 2013
Annual Report 2014
11
Chief Executive Officer’s Statement
The addition of Maroc Telecom Group to Etisalat family
strengthens our portfolio
Building on the momentum established
in 2013, last year’s achievements came
to define Etisalat’s mantras of “growth”
and “innovation.”
Our expansion in
North and West Africa, which increased
our international presence to 19 markets
across the MENA region, was accompanied
by strong figures, revenue grew by 26% to
AED 48.8 billion, along with continuance
of steady growth for our operations in the
UAE, and an accelerated effort to spearhead
the development of 5G technology through
leading global partnerships.
It is important to take stock of these
successes and celebrate them.
In the UAE last year, we invested 2.5
billion AED in bringing 4G to its fullest
potential. We remain the dominant force
in the mobile industry as a result of our
consistently innovative product and service
offerings, coupled with competitive prices.
However, it has been the realm of data
and internet where we have really looked
towards the future.
Etisalat has recognized that the rapid
growth of data usage holds the key to
success in our industry, and will be one
of the principle drivers of ICT innovation
going forward. New, transformative
platforms such as M2M and mobile
identities, as well as the digitization of
traditional forms of information transfer,
particularly video broadcast, are taking
the industry to exciting new levels. This is
where the future lies.
In 2014, in addition to further expanding
our fiber-to-the-home (FTTH) network, we
have actively worked towards establishing
the digital infrastructure required for
the ever-increasing data demands of
the future. Part of this has been the
introduction of cutting-edge technology;
but it has also been our engagement in
industry thought leadership – recognizing
innovative paths that need to be taken for
12
Annual Report 2014
the telecom sector to perform optimally to
truly deliver for its customers.
Etisalat has not merely participated in
these developments, but has been an
initiator and enabler of them on regional
and international levels. We are the first
telco in the Middle East to introduce
M2M technologies such as embedded
SIMs to the marketplace. Moreover, we
have engaged our peers and the industry
at large, establishing partnerships with
several global technology players, in order
to build new, creative revenue streams
and tackle industry obstacles in a dynamic
and effective way. Etisalat will continue
to explore integrating and regulating new
platforms in ways that will benefit telcos,
OTTs, and customers alike.
H.H. Sheikh Khalifa bin Zayed bin Sultan
Al Nahyan, President of the UAE, Ruler of
Abu Dhabi and Commander of the Union
Defence Force, has made the establishment
Smart Cities across the UAE a priority. As
our home market, we will continue to invest
heavily in making this vision a reality across
the UAE.
We have also taken H.H. Sheikh Mohammed
Bin Rashid Al Maktoum, Vice President
and Prime Minister of the UAE and Ruler
of Dubai’s recent announcement to move
1,000 government services to the digital
arena in the next three years as impetus
for Etisalat to further develop the digital
infrastructure necessary for the realization
of the concept in the UAE.
2014 was also a game-changer for Etisalat
internationally. We saw the addition of
Maroc Telecom to the Etisalat family, and
with its acquisition of Atlantic Telecom, the
creation of a regional telecommunications
block unrivaled on the African continent.
Not only does this greatly strengthen our
portfolio in Africa, but provides opportunity
to revolutionize the ICT landscape in
frontier markets.
The delivery of affordable, accessible
mobile technology is literally changing
the lives of thousands of people in our
African markets. Our mobile finance
technology is providing people in remote
and underdeveloped rural areas the ability
to access the international banking system
for the first time.
We will continue to focus on the unique
experiences and situations of each
individual market, providing the “next big
thing” to each of our 19 national subscriber
bases – whether that’s 5G in the UAE or
nation-wide mobile data coverage in Niger.
Success depends on having our finger on
the pulse of each market’s individual
requirements.
Ultimately, our ability to create value
and profit is tied directly to our devotion
to ambitious growth and cutting edge
innovation. Our long-term success
depends on our investment in long-term
solutions. This is why Etisalat has invested
in developing infrastructure that will serve
shareholders, customers and markets alike
for years to come.
We have a lot of work ahead of us –
continuing to progress in 19 diverse markets
at various levels up the technological ladder
requires tenacity and creative thinking. But
given the proven performance of Etisalat’s
devoted employees, who are equipped with
the talent and experience, and with the
continued support of the UAE Government,
our shareholders, and our customers, I have
no doubt that we are up to the task.
Ahmad Abdulkarim Julfar
Chief Executive Officer - Etisalat Group
Etisalat
13
Management Team
Ahmad Abdulkarim Julfar
Chief Executive Officer- Etisalat Group
Mr. Julfar was appointed as the CEO of the Etisalat Group in August 2011. Prior to this
appointment, he was the Chief Operating Officer of EG. Mr. Julfar has more than 25
years’ experience in the telecommunication sector and has served in various management
positions including General Manager of eCompany, ComTrust and Etisalat’s Dubai region.
In addition, Mr. Julfar serves on the boards of Mobily, where he is the Chairman of the Risk
Management committee, Etisalat Misr, Maroc Telecom and Etisalat Services Holding. Mr.
Julfar holds Bachelor’s Degrees in Civil Engineering and Computer Science from the USA.
Serkan Okandan
Abdeslam Ahizoune
Chairman of the Management Board, Maroc Telecom
Mr. Ahizoune has been Chairman of the Maroc Telecom Management Board since February
2001 and served as CEO from 1998 to 2001. Earlier, he was Minister of Telecommunications
in four different governments. Mr. Ahizoune has been Chairman of the Moroccan Royal
Athletics Federation since 2006, and also serves as a board member of several foundations:
Inter Alia; King Mohammed V for solidarity; King Mohammed VI for the environmental
protection, and Princess Lalla Salma against cancer. He is also the Vice-President of CGEM
and the President of its Moroccan-Emirati economic commission. He holds an engineering
degree from Télécom ParisTech.
Abdulaziz Al Sawaleh
Saeed Al Hamli
Dr. Daniel Ritz, Ph.D
Chief Strategy Officer, Etisalat Group
Daniel Ritz was appointed as Chief Strategy Officer for EG in February 2012. Prior to this
appointment, he was the CSO at Swisscom Group where he held various positions including
Board member of each of the Group’s Executive Board, Fastweb, Belgacom and Swisscom
IT Services. He also served as Chairman of Swisscom’s Hospitality Services and as CEO of
Swisscom (Central & Eastern Europe). Prior to joining Swisscom, he was a partner at BCG.
Dr. Ritz also serves on the Board of Atlantique Telecom, Thuraya, Maroc Telecom, PTCL and
Ufone. Dr. Ritz holds a Ph.D from the Hochschule St. Gallen in Switzerland.
Annual Report 2014
Chief Executive Officer, Etisalat UAE
Engineer Saleh Al Abdooli was appointed as Chief Executive Officer of Etisalat UAE in April
2012. A strong and charismatic leader, Saleh rose to international fame after his resounding
success in Egypt as the CEO of Etisalat Misr. He built and launched the first 3G operator in
Egypt in 7 months. In less than five years, he achieved 27% of revenue share, 28% market
share, 36% EBITDA margin, and 99% 2G/3G coverage. Al Abdooli holds Bachelor’s and
Master’s in Electrical Eng. and Telecom from University of Colorado at Boulder, USA.
Chief Financial Officer, Etisalat Group
Mr. Okandan joined Etisalat in January 2012 as Chief Financial Officer of the Etisalat Group.
Prior to his appointment, he was the Group Chief Financial Officer of Turkcell. Mr. Okandan
started his professional career at PricewaterhouseCoopers in 1992, and worked for DHL and
Frito Lay as a Financial Controller before joining Turkcell. Mr. Okandan is a board member and
Chairman of the audit committee of Etisalat Nigeria, PTCL, Ufone, Etisalat Services Holding
and a board and audit committee member of Maroc Telecom. Mr. Okandan graduated from
Bosphorus University with a degree in Economics.
Chief Human Resources Officer, Etisalat Group
Mr. Al Sawaleh is the Chief Human Resources Officer (CHRO) of the Etisalat Group. Prior
to this position, he was the CHRO of Etisalat UAE. Mr. Al Sawaleh has more than 25 years’
experience in various leadership positions. He is responsible for leading the global Human
Capital strategies including the areas of talent development, organization effectiveness,
compensation & benefits and Performance Management. He is a board member of Atlantique
Telecom, Etisalat Nigeria and Etisalat Services Holding. Mr. Al Sawaleh holds an MBA degree
in Global Leadership Management from UAE University and a BBA degree from the USA.
14
Saleh Al Abdooli
Chief Executive Officer, Etisalat Misr
Mr. Al Hamli was appointed as Chief Executive Officer of Etisalat Misr in April 2012.
Prior to this role, he was the Chief Executive Officer of Etisalat Afghanistan since 2007.
Mr. Al Hamli has more than 20 years of experience at Etisalat and Thuraya where he was
the Chief Commercial Officer before moving to Afghanistan. Mr. Al Hamli also serves on
the board of Etisalat Misr. Mr. Saeed holds a Bachelor’s of Science degree in Electrical
Engineering from USA and Executive Master’s of Business Administration degree from the
American University of Sharjah.
Rainer Rathgeber
Chief Commercial Officer, Etisalat Group
Rainer Rathgeber was appointed as Chief Commercial Officer of EG in January 2013. Prior
to joining Etisalat, he was Senior Vice President of Marketing in Europe of the OTE Group.
Mr. Rathgeber joined Deutsche Telekom in 2002 as Head of Strategy for T-Mobile Germany,
and Executive Vice President of Sales and Service Strategy for T-Mobile International. He
then went on to serve in various positions including Executive Vice President of Market
Management for T-Mobile International, CEO of T-Mobile Croatia and Member of the
Executive Management Committee of T-Mobile International. Mr. Rathgeber is a board
member of Etisalat Nigeria, PTCL and Ufone. Mr. Rathgeber holds a Diplom-Kaufmann
Degree in Economics.
Etisalat
15
Management Team
Khalifa Al Shamsi
Hatem Bamatraf
Chief Digital Services Officer, Etisalat Group
Khalifa Al Shamsi was appointed as Chief Digital Services Officer of the EG in 2012. Prior to
this role, Mr. Al Shamsi held the position of Senior Vice President of Technology Strategy of
the Etisalat Group. Since joining Etisalat in 1993, Mr. Al Shamsi has held various key senior
positions including Vice President and Senior Vice President of Marketing of Etisalat UAE.
Mr. Al Shamsi serves on the Boards of Etisalat Afghanistan, Mobily and E-vision. Mr. Al
Shamsi has a Bachelor’s degree in Electrical Engineering from the University of Kentucky,
USA.
Chief Technology Officer at Etisalat Group
Mr. Hatem Bamatraf was appointed Chief Technology Officer at Etisalat Group in September
2013. Prior to this position he was the Executive Vice President of Enterprise Business at Du.
Hatem began his professional career in 1995 at Etisalat and was seconded to Mobily in 2004
as Director of Mobile Network Development in the Central Region, KSA. Mr. Bamatraf serves
on the boards of Etisalat Afghanistan and Etisalat Sri Lanka. He graduated from the Etisalat
College of Engineering and holds a bachelor’s degree in Engineering. He has been recognised
by Global Telecom Business as one of the 40 under 40 telecom leaders in the world.
Dr. Kamal Shehadi, PhD
Chief Legal & Regulatory Officer, Etisalat Group
Kamal Shehadi was appointed as Chief Legal & Regulatory Officer of EG in November 2012.
He Joined Etisalat in 2010 as Head of the Regulatory Department. Prior to that, Dr. Shehadi
was the Chairman and CEO of TRA, Lebanon. He has more than 17 years of experience in
consulting and advisory services for telecom regulatory authorities and telecom service
providers. Dr. Shehadi serves on the board of Atlantique Telecom. Dr. Shehadi has a B.A.
in Economics from Harvard University and a PhD in International Political Economy from
Columbia University, USA.
Obaid Bokisha
Chief Procurement Officer, Etisalat Group
Obaid Bokisha was appointed as Chief Procurement Officer of the EG in June 2012. Since
joining Etisalat, he was assigned various responsibilities contributed to the network
implementation of all existing systems covering GSM, UMTS, LTE and WiFi networks.
Positions held include Vice President Mobile Networks Planning & Int’l Support of Etisalat
UAE and Senior Vice President – Mobile Networks Optimization EG.Mr. Bokisha serves on
the board of Canar, Zantel and Etisalat Nigeria. Mr. Bokisha has a degree in Communications
Engineering from the Etisalat College of Engineering.
16
Annual Report 2014
Javier Garcia
Chief Internal Auditor, Etisalat Group
Javier Garcia joined Etisalat in December 2012 as Chief Internal Auditor of the EG. Mr. Garcia
was the head of Internal Audit at Telefonica Group before joining Etisalat. He held various
positions with Telefonica including Business Process Audit Director and Vice President of
Internal Audit (Chile) before becoming the Group Head of Internal Audit. Mr. Garcia serves
on the audit committees of Maroc Telecom, PTCL and Ufone. Mr. Garcia holds a Bachelor’s in
Economics and a Master’s in Financial Markets from the Autonomous University of Madrid.
John Wilkes
Chief Internal Control Officer, Etisalat Group
John Wilkes was appointed as the Chief Internal Control Officer for EG in January 2013.
Prior to this, Mr. Wilkes was the General Manager of Risk & Supply Chain of the Vodafone
Hutchison Company. He has more than 24 years of experience in companies such as KPMG Air
in New Zealand where he was the Group Internal Auditor and Stockland in Australia where
he held the position of Chief Risk Officer. Mr. Wilkes is a qualified chartered accountant.
Etisalat
17
Vision, Mission
and Strategic Pillars
Etisalat Group Strategy Achievements
Etisalat continues to make important progress in execution of
its corporate strategy, focused on ICT & Content
The Middle East, Africa and Asia continue
to present strong growth opportunities for
the telecom industry. Marked by its diversity,
Etisalat’s footprint includes markets where
people are experiencing the internet for the
first time on mobile networks, while in others
FTTx and 4G is fast becoming a widespread
technology. Yet there is a common theme.
Fuelled by the rollout of advanced networks
and increasingly affordable smartphones
and other data-enabled devices, demand for
high quality data and voice networks and an
array of data-driven consumer and business
services continues to increase and support the
overall growth of the telecom industry in all of
Etisalat’s markets of operation.
Vision
Mission
To be the leading and most admired
emerging markets telecom group
• Provide best in class total customer
experience for retail and business
• Deliver attractive returns to shareholders
while investing in the company’s long
term future
• Support economic development and
job creation through ICT & socially
responsible behavior
Strategic
Pillars
18
Annual Report 2014
One
Company
People
& culture
Operational
Excellence
Portfolio
Customer
Experience
Service
offering
As the industry evolves, Etisalat continues to
position itself at the heart of change and to
stay ahead of the challenges presented. Across
its footprint, Etisalat Group’s vision, mission
and corporate strategy remain valid. In 2014,
Etisalat has not only made important progress
in the journey of execution of its corporate
strategy, but has also increased its focus
on two sectors, ICT and Content. It believes
this focus is vital to achieving its strategic
objectives and adapting to the changing
dynamics of customer demand. The areas
of ICT and Content both play increasingly
important roles for Etisalat, representing vital
value-driven services with which it can provide
a holistic and differentiated offering to its
consumer and business customers, as well as
monetizing the investments made in its high
quality broadband networks.
Service Offering
Etisalat maintains its commitment to providing
a differentiated and innovative service
offering, defined by the individual needs of
the markets in which it operates. Whilst not
overlooking the vital importance of voice
for Etisalat’s customers, the recent focus on
data-driven services has enabled significant
growth in data revenues across its operations.
Etisalat has also increased its share of the
business segment by securing major regional
Multi-National Company (MNC) accounts
and providing an increasingly wide range of
tailored propositions to suit Enterprise and
SME needs. The growing focus on Information
and communications technology (ICT),
particularly in key markets such as the UAE
and Saudi Arabia, will continue to help drive
growth in this area. In digital services, Etisalat’s
revenues continue to show encouraging
growth through enhanced offerings and
widened reach. Etisalat’s m-commerce service,
for example, extends to 12 countries with a
wide range of functionalities and services. In
addition, M2M services have been launched in
several key markets within Etisalat’s footprint
and a unified cloud platform is currently being
deployed across all major operating companies.
Customer Experience
In 2014, Etisalat continued to enhance the
level of customer experience it provides across
all touch points. In addition to an expanding
portfolio of direct distribution channels
consisting of an increasing number of flagship
stores, Etisalat’s customer-value-management
systems have also supported continuous
improvements in customer experience.
Through customer insights and data analytics,
Etisalat is proud today that it understands
its customers better than ever, and is able to
offer products and services which effectively
reflect their requirements. Finally, multiple
technology enhancements have benefited
customers, including the deployment of
LTE Advanced technology in the UAE and
the rollout of 3G services in Pakistan, Ivory
Coast and Benin, which have all continued to
ensure that Etisalat offers the highest level of
network quality to its customers.
Operational Excellence
While maintaining its position as one of
the highest margin players in the telecom
industry, Etisalat nevertheless continuously
strives to improve efficiency. Over the last year,
significant savings have been generated as a
result of Etisalat’s initiatives in procurement,
which will continue to improve still further
as a result of the company’s growing scale.
Etisalat’s focus on operational efficiency has
also included cost optimisation measures in
the UAE, Egypt and Nigeria which have helped
sustain its high margins overall. In addition,
Etisalat has been working to optimize its
capital structure through several initiatives,
that included the issuance of its inaugural
bond worth USD 4.2 billion in June 2014.
Portfolio
2014 has been a very active year for Etisalat’s
portfolio. In line with the investment guidelines
defined by its corporate strategy, Etisalat has
cemented its strong position in the Middle East
and Africa through the acquisition of a 53%
stake in Maroc Telecom in May 2014. Maroc
Telecom is the incumbent telecom operator
in Morocco and owns controlling stakes in
the incumbents in four French-speaking West
African countries (Burkina Faso, Mali, Mauritania
and Gabon). Each of these companies boasts
an integrated fixed and mobile operation,
as well as number one positioning in most
markets, with the combined entity providing
strong synergies for Etisalat Group. In addition,
Etisalat and Maroc Telecom also signed a Share
Purchase Agreement for the sale of Etisalat’s
shareholding in operations in Benin, Central
African Republic, Gabon, Ivory Coast, Niger and
Togo. In parallel, Etisalat continues to assess
potential opportunities to improve positioning
and create value across its footprint, such as the
tower sale and leaseback transaction realized
between Etisalat Nigeria and IHS.
One Company
Etisalat continues to believe that significant
value can be created for a large organization
by operating consistently across the portfolio
with a common set of processes and systems.
In 2014, many important improvements have
been made in this regard. In addition to the
substantial financial synergies brought about
by leveraging Etisalat’s economies of scale, the
company has also placed strong emphasis on
deploying various Group-wide programs to
enhance consistency and collaboration. Such
programs include the deployment of regulatory
compliance systems and the identification
and resolution of revenue leakage across the
group. In the future, these programs will also
be extended to Maroc Telecom.
People & Culture
Etisalat recognizes that people are one of its
most important assets. As such, it continues
to deliver on its objectives in this regard to
strengthen the company’s leadership, empower
its employees and focus on execution. Talent
development initiatives such as the Top 100
Talent and High Potential Program, have been
enhanced this year, and our survey results
indicate that employee engagement in the
organization continues to rise. As an indicator
of the strength of Etisalat’s management,
several key management positions in our
operating companies in Nigeria, Sri Lanka,
Ivory Coast, Canar and Tanzania have been
supplied with internal resources.
Etisalat
19
Key events of the year
April 2014
October 2014
Ufone acquires 3G licence
Etisalat’s Mobile Network First In The
Region To Begin Upgrades To 700 Mbps
4g LTE Tri-Band Carrier Aggregation
Technology
Ufone was one of 4 mobile operators in Pakistan
to bid in the country’s initial 3G auction. Ufone;
a wholly owned subsidiary of PTCL was allocated
5 MHz band on 2100 MHz band.
Etisalat has tested and started a phased
upgrade of it its network to the futuristic 4G
Advanced (LTE-A) tri-band technology based
on carrier aggregation technology, for the
first time in the region. A live testing on the
network was successfully concluded, making
way for ultra-speeds of 700Mbps mobile
broadband connectivity and ensuring network
readiness once handsets are commercially
available.
Accelerating interoperable mobile
money service
Etisalat partners with 8 other telecom
operators to accelerate the implementation of
interoperable mobile money services across 48
countries in Africa and Middle East. This is part
of the GSMA Mobile Money Interoperability
programme.
Etisalat showcases 5G mobile
broadband at Gitex
May 2014
Etisalat and Huawei have jointly showcased
5G mobile broadband services at Gitex
Technology Week in Dubai. This is the first
time 5G technology has been presented in
the region. The demonstration showcased an
115 Gbps data transmission rate capability,
which is faster than current mobile networks.
An increase of capability will support the
connection requirements for the Internet
of Things, 4D film, MirrorSys and Vehicular
Telematics.
Acquisition of 53% of Maroc Telecom
Etisalat successfully completes acquisition of
53% shareholding in Maroc Telecom for a final
consideration of € 4.138 billion. Additionally,
Etisalat and Maroc Telecom sign a Share
Purchase Agreement (SPA) for sale of Etisalat’s
shareholding in French-speaking operations
in West Africa (Benin, the Central African
Republic, Gabon, the Ivory Coast, Niger, Togo
and Prestige Telecom). These transactions will
establish the largest Franco-phone West Africa
telecom cluster.
June 2014
US$ 7 billion Global Medium Term Note
Programme
Etisalat lists its US$ 7 billion GMTN on the Irish
Stock Exchange and issues 4 bond tranches
consisting of: 5-year tranche (US$ 500 million),
7-year tranche (€ 1.2 billion), 10-year tranche
(US$ 500 million) and 12-year tranche (€ 1.2
billion). This bond issue is the biggest corporate
issue ever in the region.
Etisalat Credit Ratings
Credit Ratings Agencies S&P, Fitch and Moody’s
affirm Etisalat high credit Ratings at AA-/A+/
Aa3 with stable outlook. S&P at the same time
affirmed the ‘AA-’ senior unsecured debt ratings
on Etisalat’s US$7 billion GMTN program.
20
Annual Report 2014
December 2014
Etisalat Group CEO elected as GSMA’
Deputy Chair
August 2014
Etisalat Nigeria and IHS sign tower sale
& lease back agreement
Etisalat Nigeria signs sales and leaseback
agreement with IHS Holding Limited as part of
its strategy to drive improvement in the quality
of network performance and to accelerate roll
out of 2G and 3G coverage and new services to
its customers. The transaction is the first by a
major GSM operator in Nigeria.
The GSMA Board has elected Ahmad
Abdulkarim Julfar, CEO of Etisalat Group as
Deputy Chair for a two-year period from
January 2015 through December 2016.
The newly elected board will oversee the
strategic direction of the organisation,
which represents nearly 800 of the world’s
mobile operators, as well as more than 250
companies in the broader mobile ecosystem.
Etisalat
21
Delivered Strong Operational and
Financial Performance
Operational Highlights
EBITDA
Subscribers
169
148
Etisalat Group aggregate subscribers grew
by 14% on an annual basis to 169 million
in 2014. The net addition of 21 million
subscribers in the year was mainly a factor
of the consolidation of Maroc Telecom as
well as good subscriber growth in the UAE
and Nigeria.
In the UAE, the active subscriber base grew
to 11.0 million subscribers from 8.4 million
in 2013, representing year on year growth
of 6%. Subscriber growth was mainly
driven by strong growth in the mobile and
eLife segments. The mobile subscriber base
grew year on year by 7% to over 9.0 million
subscribers representing a net addition of
0.6 million subscribers of which 34% was
in the high quality postpaid segment. Fixed
line subscriber segment contracted 5%
year on year as we continued our efforts
to migrate subscribers to the eLife segment
that continued to drive consistent growth
with 16% year on year increase. Total
broadband segment grew by 8% year on
year to 1.0 million subscribers.
In the International operations, Nigeria
evidenced strong subscriber growth in the
year with year over year growth of 24% by
adding 4.1 million net additions and closing
the year with 21.1 million subscribers. In
Pakistan, subscriber base declined by 7%
year over year to 26.3 million impacted
by the subscriber registration exercise
mandated by the industry regulator and
the intense competitiveness of the mobile
segment. For Maroc Telecom the subscriber
base exceeded 40 million customers as at
31 December 2014, representing a year
over year growth of 8%. This growth
is mainly attributable to international
operations that grew by 17%.
23.4
18.9
EBITDA (AED Bn)
Revenues
38
.9
b
on
b il li
.8
8
4
on
illi
Revenues
(AED Bn)
Etisalat Group’s full year consolidated
revenue increased year on year by 26%
to AED 48.8 billion driven by strong
performance of domestic operations
and the consolidation of Maroc Telecom
operations. In the UAE, revenue increased
9% to AED 27.1 billion, as a result of growth
of the subscriber base with increased
bundled propositions (voice and data) to
consumer and enterprise segments. In
addition, we witnessed significant increase
in handset sales benefiting from new
product launch such as iPhone6.
International consolidated operations
was impacted by the consolidation of
Maroc Telecom Group and discontinued
operations of one of our subsidiaries. Full
22
Annual Report 2014
Group consolidated EBITDA grew to AED
23.4 billion representing a year-over-year
growth of 24% in 2014, while EBITDA
margin declined 1 point to 48%. EBITDA
growth was mainly due to consolidation of
Maroc Telecom operations and continued
strong growth in the domestic operations.
EBITDA margin was impacted by a number
of one-offs related to Voluntary Separation
Scheme in Pakistan, provisions for disputes
on interconnection rates in Egypt and
provisions for bad debts and tax audits in
other operations.
In the UAE, EBITDA in 2014 increased by
6% to AED 15.0 billion resulting in EBITDA
margin of 55%. EBITDA growth is due
to higher revenue growth while EBITDA
margin was slightly lower year over year
due to change in revenue mix and higher
marketing expenses and interconnect costs.
EBITDA of international consolidated
operations in 2014 increased by 107% to
AED 8.4 billion contributing 36% to Group
Consolidated EBITDA. In Egypt EBITDA for
the full year was AED 1.8 billion with an
EBITDA margin of 37%, 3 points higher
than 2013. In Pakistan, EBITDA for the
full year declined year over year by 25%
to AED 1.3 billion with EBITDA margin
declining by 9 points to 27%. This decline
is mainly attributed to a one-off provision
related to the Voluntary Separation
Scheme (VSS). Adjusting for this item,
EBITDA margin would have been 33%,
slightly lower than the prior year. EBITDA
of international operations benefited from
the consolidation of the results of Maroc
Telecom Group effective from May 2014.
Net Profit and EPS
year revenue grew year-on-year by 55%
resulting in 44% contribution to Group
revenue up from 35% for the full year
2013. In Egypt, revenue for 2014 was AED
4.8 billion, increasing by 2% from the prior
year mainly attributed to growth in the
data segment.
In Pakistan, revenue for 2014 was AED
4.7 billion, a decline of 1% from the prior
year on falling international incoming
traffic that was not fully compensated by
the strong performance of the fixed and
wireless broadband.
7.1
90
2013
8.9
112
2014
Consolidated net profit after Federal
Royalty increased by 26% to AED 8.9 billion
resulting in profit margin of 18%. The
increase in profit is attributed to higher
EBITDA level, lower royalty and impairment
charges that was partially offset by higher
depreciation and amortization expenses,
lower share of results of associates, higher
finance costs and forex losses.
February 2014 the Board of Directors has
resolved to propose a final dividend for the
second half of 2014 at the rate of 35 fils
per share, bringing the full year dividend to
70 fils per share. In addition, the Board of
Directors has proposed a 10% bonus share.
This proposal is subject to shareholder
approval at the Annual General Meeting
scheduled for the 24th March 2015.
Earnings per share (EPS) amounted to AED
1.12 for the full year of 2014. On 25th of
Net Profit (AED Bn) EPS (Fils)
Our results benefited from the
consolidation of Maroc Telecom Group
financials effective May 2014.
Etisalat
23
Operational Highlights
CAPEX
8.9
6.3
CAPEX (AED Bn)
Consolidated capital expenditure increased
by 41% to AED 8.9 billion resulting in
capital intensity ratio of 18% compared
to 16% in the prior year. This increase in
capital spending is impacted by the 3G
license acquisition and 2G license renewals
in Pakistan and consolidation of Maroc
Telecom. Adjusting for these items, capital
expenditure would have been AED 5.8
billion and capital intensity ratio 14%.
In the UAE, capital expenditure in 2014
increased by 25% to AED 2.5 billion while
capital intensity ratio increased 1 point to
9%. Capital expenditure was committed
to mobile network modernization and
coverage improvement in addition to FTTH/
Profit and Loss Summary
eLife deployments to improve footprint.
Capital expenditure in consolidated
international operations amounted to
AED 6.3 billion, an increase of 48%
from year 2013 level. In Egypt, capital
expenditure exceeded AED 1.0 billion
resulting in a capital intensity ratio of
21%. Capital spending focused on capacity
enhancement to address the increased
demand for data. Pakistan operations
capital expenditure was AED 3.0 billion,
up 113% year on year and capital intensity
ratio of 63%. Adjusting for the 3G license
acquisition and 2G license renewal, capital
intensity ratio would have been 32%.
(AED m)
FY’13
FY’14
Revenue
38,564
48,767
EBITDA
18,901
23,365
EBITDA Margin
49%
48%
Federal Royalty
6,115
5,333
Net Profit
7,078
8,892
18%
18%
FY’13
FY’14
Cash & Cash Equivalents
15,450
18,543
Total Assets
85,716
129,585
Total Debt
5,872
22,229
Net Cash
9,579
(3,686)
49,593
60,927
Net Profit Margin
Balance Sheet Summary
(AED m)
DEBT
22.2
5.9
Total consolidated debt amounted to
AED 22.2 billion as of December 2014,
as compared to AED 5.9 billion as at 31
December 2013; an increase of AED 16.4
billion reflecting primarily the issuance of
bonds to finance the acquisition of 53%
stake in Maroc Telecom and the first-time
consolidation of Maroc Telecom’s results.
• PTCL Group (AED 1.5 billion)
Consolidated debt breakdown by operations
as of 31 December 2014 is as following:
• Etisalat Group (AED 14.2 billion)
DEBT (AED Bn)
• Maroc Telecom (AED 1.9 billion)
• Etisalat Misr (AED 1.5 billion)
24
Annual Report 2014
Total Equity
• Etisalat Afghanistan (AED 1.5 billion)
• Atlantique Telecom (AED 1.4 billion)
Cash flow Summary
• Etisalat Sri Lanka (AED 0.3 billion)
(AED m)
FY’13
FY’14
57% of the debt balance is of long-term
maturity that is due beyond 2017.
Operating
12,974
17,209
Investing
(4,854)
(24,102)
Consolidated cash balance amounted to AED
18.6 billion as of 31 December 2014 leading
to a net debt position of AED 3.7 billion.
Financing
(6,585)
9,162
1,535
2,268
Currency mix for external borrowings is 52%
in Euros, 23% in US Dollars, 5% in Egyptian
Pounds and 20% in various currencies.
Effect of FX rate changes
(19)
834
15,450
18,552
Net change in cash
Ending cash balance
Etisalat
25
Etisalat Group’s
Footprint
Afghanistan
Morocco
Pakistan
Egypt
Mauritania
Mali
Niger
Saudi Arabia
United
Arab
Emirates
Sudan
Burkina Faso
Nigeria
Sri Lanka
Central
Africa
Cote D’ivoire
Togo
Benin
Gabon
Tanzania
26
Regions
Middle East
Operator
Country
Etisalat
United Arab Emirates
Etihad Etisalat (Mobily)
Saudi Arabia
Maroc Telecom Group
Morocco & West AFrica
Etisalat
Nigeria
Atlantique Telecom, Moov
West Africa
PTCL/Ufone
Pakistan
Etisalat
Sri Lanka
Licence Type:
Etisalat Ownership
Population: (million)
Penetration
Number of operators
Network Coverage, population
Mobile, Fixed and Internet
100%
9
Mobile 191% Fixed 25%
2
100%
Mobile & Interent
28%
31
186%
Mobile 3
99%
Mobile, Fixed & Internet
53%
73
122%
Mobile 3-4 / country
-
Mobile
40%
174
72%
Mobile 5
82%
Mobile
100%
66
74%
Mobile 2-6 per country
59%
Mobile, Fixed and Internet
23%
186
Mobile: 78% Fixed: 3%
Mobile 5, Fixed 11
77%
Mobile
100%
21
126%
Mobile 5
98%
Operator
Country
Etisalat Misr
Egypt
Thuraya
Zantel
Tanzania
Canar
Sudan
Etisalat
Afghanistan
Licence Type:
Etisalat Ownership
Population: (million)
Penetration
Number of operators
Network Coverage, population
Mobile & Interent
66%
85
116%
Mobile 3
99%
Satellite Telecommunication
28%
Mobile and Fixed
85%
51
62%
Mobile 6, Fixed 2
45%
Fixed
90%
34
1%
Fixed 2
31%
Mobile
100%
31
80%
Mobile 4
78%
Annual Report 2014
Africa
Satellite 4
140 countries
Asia
Etisalat
27
Middle East
Middle East
Etisalat UAE
Management Review
Customer experience excellence, data verticals, ICT and digital
services, superb government partnership, building a strong
Emirati brand and engaged staff are our key strategic pillars
In 2014, Etisalat reinforced its leadership
position in the UAE market, driven
by its customer-centric strategy built
around differentiation, value for money,
innovation and user experience; while
leveraging the capacity of its best in class
LTE and FTTH network, data centres, smart
hub, country-wide coverage, and expanded
footprint.
Having a balanced view on market realities
and future prospects, allowed us to drive
our revenue profile towards data, resulting
in data revenues constituting 30% of
mobile service revenue.
During the year, Etisalat launched several
segmented propositions that have been
instrumental to capturing additional
growth pockets. For the mobile sector,
Etisalat has focussed on targeted,
highly diversified and ‘value for money’
propositions including the introduction of
‘FIVE’ – a sub brand that has become the
preferred option for customers that value
low tariffs, per second billing and the most
competitive pricing for international calls.
For postpaid customers we have launched
several new and enhanced mobile service
packages that offered ‘value for money’,
flexibility and pricing transparency, among
which was the flagship business postpaid
mobile package Business Ultimate designed
to cater to the specific needs of SMBs and
large enterprises.
In the mobile data space Etisalat introduced
several innovative propositions including
Family Pack; the first consumer shared data
plan in the UAE; the Global Data Plan - first
in the region with local and roaming data
and unlimited Wi-Fi worldwide; and Data
Boosters a product that allows customers
to temporarily extend their mobile data
30
Annual Report 2014
allowance.
Introduction of new 3GB
and 10GB tiers, were key developments
in supporting a strong revenue growth
and contributing to a better customer
experience by avoiding bill shock issues.
Business DataShare was launched for the
first time in the region, allowing business
users to share one pool of data with multiple
users and stay online and connected while
in the office or on the go.
Also fundamental to mobile data growth,
was the significant expansion of Etisalat
UAE’s smart devices portfolio and the
launch of affordable smartphones to
incentivise migration to 3G. By offering
smartphones and tablets from all major
vendors and mobile operating systems,
Etisalat has reaffirmed its position as the
operator of choice for smart devices.
Etisalat has had strong revenue growth
in its fixed business in 2014, validating
the strategic investment in FTTH and
reconfirming Etisalat global leadership
in fibre adoption. With the revamping of
eLife packages with an increased focus
on content segmentation, competitive
pricing and the expansion of the eLife
ON multiscreen service, there has been a
strong adoption of eLife packages with
more than 16% increase in customers.
Additionally, the launch of Smart Home
solutions and online gaming has cemented
Etisalat’s position as the key enabler of
home entertainment and automation in
the UAE.
The IPTV Customer base is now close to half
a million customers, and the OTT Customer
base increased by 205,000 with 17 new
E-Hospitality Bulk IPTV customers. In
addition the IPTV platform was upgraded
to support new features and applications
for high level TV entertainment with a
new system implemented to measure
and monitor quality of service. The OTT
Platform expanded to support 400,000
customer capacity and 25 new features
were launched for both iOS & Android
devices.
The business landscape is rapidly changing
and high-speed broadband connectivity
is becoming a crucial requirement for
increased business productivity and
profitability. In 2014, Etisalat offered free
broadband speed upgrades of up to 2.5
times to Business customers, that provided
faster and extremely reliable fixed-line
Internet connections.
To address the needs of SMBs, who
form the foundation of UAE’s economic
growth, Etisalat launched Business Quick
Start – the first in a series of integrated
Business in a Box solutions that offer
SMBs high-speed fixed broadband
Internet, free voice minutes and a free
smart device on a single, converged bill.
A dedicated, state-of-the-art call centre
for SMB customers has been launched
that serves more than 72,000 SMBs and
offers convenient and comprehensive ICT
services and support, allowing SMBs to
focus on their core competencies. Etisalat
also partnered with a number of strategic
business hubs - including Ajman, Fujairah
and Ras Al Khaimah Free Zones, and the
Abu Dhabi Department of Economic
Development - to provide an improved
telecom and ICT service experience. These
partnerships aim at making it convenient
and easy for businesses to set up in the
UAE, increase SMBs competitiveness and
position UAE high on the IT readiness and
competitiveness index.
Etisalat launched its new Tier III Data Centre
in Abu Dhabi to meet the region’s rapidly
growing demand for advanced data and
managed services, and leverage the UAE’s
strategic position as a regional business hub.
It offers hosting and cloud services including,
collocation, hot seats, Storage-as-a-Service,
Backup-as-a-Service, Managed Services and
public, private & hybrid cloud computing. It
also includes a round-the-clock, dedicated
network operations centre with an onsite
support team.
Etisalat launched its Smart Security and
Surveillance solution, the first of its
kind in the UAE. This is a fully managed
security solution that provides customers
with a powerful way of monitoring their
assets and supports them in the expedient
response to theft, vandalism, accidents,
pilferage and unauthorized access. Etisalat
also expanded its managed security services
portfolio, offering a firewall/Unified Threat
Management service, which includes
firewall, antivirus and anti-spam services,
content filtering and VPN capabilities.
This service provides enterprises both ‘on
premise’ and ‘in cloud’ options offering
end-to-end management, monitoring and
maintenance services to help businesses
better protect their infrastructure against
evolving threats.
Etisalat significantly expanded its
exposure and presence in digital and social
networks. The company now has carrier
billing agreements with all the major
open mobile app marketplaces, benefiting
from the development of digital services
by third parties and OTT players. Etisalat
also launched a self-service mobile app,
available in all major mobile operating
systems. With the Etisalat UAE mobile app
customers now have a more convenient
way to subscribe to services, check their
balance, pay their bills or recharge a
prepaid line.
Etisalat UAE extended its global LTE roaming
to 40 new international destinations, and
its roaming networks to 723 partners
in 207 countries, while launching its
Smarthub IPX with 14 major global peering
agreements and launching the Smarthub IX
as a national internet exchange.
In 2014, Etisalat UAE has continued its
commitment to customer experience
by significantly expanding its footprint
through increased points-of-sale and
the roll-out of its Smart shops. Etisalat
also expanded its indirect channels with
eight “shop-in-shops” installed in major
partner retailers, and six new franchise
locations established to increase customer
convenience. To increase brand awareness
Etisalat is rebranding independent reseller
shops and participated in major commercial
events such as the Ramadan Night Market,
GITEX Shopper and Global Village. With this
expansion, indirect channels completed
almost 4 million customer interactions in
2014.
Etisalat UAE’s infrastructure and network
will assure our leadership in the ICT and
digital arena. To maintain a forward-looking
perspective, mandates the continued
investment in network transformation to
improve customer experience, enhance
operational efficiency and support new
offerings that require higher capacity.
on the network. These initiatives elevated
Etisalat to position two worldwide in
Mobile Broadband ranking as per MBB
World Ranking. LTE coverage was also
enhanced to cover 90% of populated areas
across UAE, leading to a traffic increase of
18%.
As part of the modernization efforts,
Etisalat upgraded more than 3,648
sites with state-of-the-art single RAN
technology
resulting
in
improved
broadband speeds and higher capacity to
cater for increased traffic. The Fiber to
Mobile Network (FTTM) was enhanced by
adding 3,500 additional links for mobile
network modernization & additional 1,900
links for expansion purposes. Additionally,
over 70,000 voice customers and over
28,000 internet customers were offloaded
from legacy equipment further enhancing
customer experience on our network.
Moving Forward
Moving forward, Etisalat UAE will continue
its leadership journey through wellstructured strategies that adapt to changes
in consumer behaviours, industry dynamics,
and intensifying competition. We remain
focused on our key strategic pillars that
evolve around customer experience
excellence, data verticals, ICT and digital
services, superb government partnership,
strong Emirati brand and engaged staff.
Etisalat significantly improved the mobile
broadband Customer Experience with a
multiple of initiatives, including the launch
of LTE Advanced and use of six carriers
Etisalat
31
Middle East
Mobily
Middle East
Etisalat Egypt
Mobily continues to evolve its data leadership position in
Saudi Arabia with higher speeds and enhanced customer
experience
As the mobile industry evolves in Egypt, one of Etisalat Misr’
key priorities will be to continue building its data service
capabilities and provide excellence in the customer experience
Since inception Mobily evolved as a market
leader in the mobile and fixed broadband
segments
through
first-to-market
innovations and launch of several new
concepts. 2014 has been an eventful year
for the company following the revamping
of market segmentation process that
resulted in a more focused approach.
This change in the market segmentation
approach included the introduction of
segment specific value propositions. As
a result, Mobily’s mid and high value
segments benefitted from improved
postpaid voice plans offering, an enhanced
Raqi and Wajid service resulting in doubledigit growth in Wajid postpaid revenue
during the year. Our prepaid platform
enjoyed our Prime bundle offers, which
were introduced in Saudi Arabia for the
first time. Additionally we shifted the
focus of our international segment, which
predominantly caters to expatriates, to
prepaid plans for Hajj, Umrah as well as
Embassy activities.
Another important segment that Mobily
targeted was the 15- to 25-year-old
youth demographic. During the year, we
32
Annual Report 2014
refocused on this target group through the
relaunch of our Fallah brand. Our Fallah
Youth Programme engages with the youth
through specialised apps and social media.
Fallah has been instrumental in the growth
of our youth customer base and this growth
momentum has been sustained through
additional products introduced throughout
the year, coupled with community activities
and our team of youth ambassadors.
We secured an exclusive partnership with
UEFA and HTC until 2015 whereby we are
able to engage with our football-loving
customers for all UEFA-related activities.
We further capitalised on our long standing
partnerships with device manufacturers to
showcase exclusive launches such as the
UEFA engagement for our Fallah customers
and the LG G Flex’s unique product offer to
our RAQI subscribers.
Mobily constantly evolved its data
leadership position by introducing an
enhanced version of data packages focused
on volume based offering with higher
speeds and better customer experience.
Mobily also launched digital advertising
platforms, location based advertising, and
missed call notifications advertising. We
were also the first to introduce a telesalesbased stimulation programme comprising
over 300 agents, targeting our mid and
high value customers.
Mobily’s holistic end-to-end approach
during the World Cup 2014 resulted in a
number of dedicated offers for our value
customers as well as data subscribers.
Furthermore, we effectively leveraged our
online and on-ground activities for our
youth segment resulting in our highest
ever viewership and subscriber numbers
across our social media channels.
In addition, Mobily maintained its position
in being the first operator in Saudi Arabia
to introduce latest smart devices: Samsung
Galaxy S5, Note and Alpha; HTC M8;
Sony Z2 and Z3; Lumia, and LG G Flex.
Finally, in 2014, Mobily continued to offer
a world-class working environment for its
employee and added a success in the field
of human resources after being awarded
the Best Employer Brands Award 2014
for the GCC countries and the MENA HR
Certificate of Excellence.
2014 marked a year of telecom regulatory
changes in Egypt, requiring Etisalat Misr to
adapt to a new regulatory environment. The
first such changes occurred on a national
level following the government’s mandated
sale of new SIMs through controlled
channels with the purpose of collecting
customers’ information. To comply with
such regulatory requirements, Etisalat
Misr designed a fully-fledged platform to
update its customers’ data and expanded
its retail footprint through mini franchises
and shop-in-shop concepts. Egypt’s second
regulatory change outlined a roadmap
for a Unified License framework including
procedures, conditions and obligations
applicable to all telecom players by 2018.
Etisalat Misr, in an effort to preserve
shareholders and key stakeholders value,
voiced its concerns to the regulator after
evaluating the potential impact of the
framework on the telecom market and its
market position.
Etisalat Misr continued its efforts to resolve
its pending issues with Telecom Egypt and
the Egyptian Telecom Regulator prior to
the fourth mobile operator launch. These
issues include international rate settlement,
reference Interconnection offer and Service
Level Agreement with Telecom Egypt,
compensation for spectrum, granting a
third carrier, and band interference with
regulator.
Management Review
Etisalat Misr continued to capitalize on
its successful e-commerce product, flous
with the launch of a virtual credit card,
becoming the first mobile operator to
launch such service in the MENA region.
This pioneering service enhanced Etisalat
Misr’s competitive advantage in a growing
digital market and supported customers’
awareness of the service while reducing
customers’ reluctance to use electronic
payments as the traditional requirements
for owning a credit card have been
eliminated. The virtual credit card offers
customers a specific monetary amount
that is deducted from their mobile wallet
and is valid for 24 hours.
As the mobile industry in Egypt evolves
Etisalat Misr is focusing on expanding
the scope of call centers to promote
greater customer self-care via webbased channels, including social media.
Recognizing this Etisalat Misr appointed
a team to effectively handle back-office
and customer complaints to ensure the
best customer experience and first-contact
resolution with an improved response time
reduced from 51 minutes to 4 minutes.
Etisalat Misr have implemented listener
reports designed to monitor any mention
of Etisalat across social media and take
immediate and appropriate corrective
action where necessary.
The successful launch of the first postpaid
lifestyle portfolio, My Life, marked another
milestone for Etisalat Misr. My Life allows
customers to enjoy a variety of lifestyle
benefits depending on their chosen tariff.
Benefits include: free monthly cinema
tickets, free airline tickets to Europe and
shopping vouchers My Life embodies
Etisalat’s Misr’ strategy to widen our scope
through partnership opportunities in the
non-telecom market, resulting in improved
retention of high value customers coupled
with new revenue streams, the creation of a
lifestyle community, and partnerships with
companies targeting the same segment.
Following the launch of Kol Youm Gedeed in
2013 (an initiative offering customers daily
promotions via SMS), Etisalat Misr launched
an interactive communication platform
where customers can dial a short-code and
customize their promotional categories
and offers. This interactive platform
enables customer value management team
to know what to offer, to whom and when,
resulting in more targeted and relevant
offers providing customers total flexibility.
The platform includes: Voice; BoR; SMS;
MI, and ADSL.
In 2015, Etisalat Misr’ focus will be on
capturing the growth potential of data by
investing in a third carrier.
Etisalat
33
Middle East
Thuraya
Management Review
Strengthening our commitment to provide unmatched
communication capabilities by pioneering innovations and
strategic partnerships
We started the year with the launch
of the world’s first satellite adaptor for
the smartphone, the Thuraya SatSleeve.
Designed for Android-based smartphones,
this game-changing product allows
Samsung Galaxy users to turn their
smartphone into a satellite phone to make
phone calls, send SMS messages and access
apps via our satellite network when they
are unable to connect to a terrestrial
GSM network. Awarded the Innovation
Award from The Mobile Satellite Users
Association, the Thuraya SatSleeve enables
users to enjoy ubiquitous coverage in the
most remote environments that are not
served or are under-served by terrestrial
GSM networks.
Our first dedicated maritime broadband
terminal, Thuraya Orion IP, was launched
this year reinforcing our focus in this
growing segment. Thuraya Orion IP
leverages the company’s highly reliable
and uncongested network with Maritime
Broadband pricing packages to provide the
best value for connectivity for users in the
shipping sector.
In an effort to further extend our maritime
product portfolio, we also launched Atlas
IP, a feature-rich broadband satellite
terminal. Atlas IP is our second maritimespecific product launch in 2014 and is
designed to complement the Thuraya
Orion IP broadband terminal by offering a
fully-featured voice and data product with
additional built-in functionality.
Our innovative path continued with the
launch of our first dedicated vehicular IP
broadband terminal. Thuraya IP Voyager
is a cost-effective, high-quality satellite
terminal designed for end-users in the
government; oil and gas; media, and relief
sectors. It is the only terminal available in
the market capable of achieving streaming
IP rates of up to 384 kbps as well as user-
34
Annual Report 2014
definable asymmetric streaming. Thuraya
IP Voyager enables remote users to
communicate reliably and efficiently using
video, data and VoIP services to achieve
mission-critical tasks in remote areas.
We were also selected by Smart
Communications to provide mobile
satellite handsets and airtime services to
its subscribers in the Philippines. The multiyear deal will see Smart partner with us on
a combined voice services and handset
offer branded as SmartSAT.
Our new partnership with Talia, a top-tier
provider of data communications and voice
services, was also announced this year.
Headquartered in the UK, Talia owns and
operates a teleport facility in Germany and
offers satellite communication solutions.
Talia’s customer base spans various market
sectors, primarily oil and gas, that now
have access to our portfolio of mobile
satellite products and solutions.
Our recent partnership with Airtel Africa
will provide their customers across 17
countries with voice and broadband
connectivity via Thuraya’s satellite network
across the continent’s most remote areas. .
Our recent collaboration with Satcom
Direct, a US-based provider of voice and
data communication services, will see
Satcom Direct expand its portfolio of
mobile satellite services for its enterprise;
government; maritime; media, and relief
customers.
We now offer top-up services for
Thuraya prepaid SIMs for voice and data
services using the Western Union® Quick
PaySM service. The service is available
at participating Western Union agent
locations in the majority of the 200+
countries and territories in which it
operates. This new and convenient method
of payment enables our customers to
recharge their pre-paid SIMs at any time,
with no extra fee, even in areas with
limited distribution.
The Space Pioneer event held during the
year marked a celebratory moment for
the UAE’s burgeoning satellite and space
industry as well as Thuraya’s milestone
achievements in innovating mobile satellite
solutions. Hosted by Thuraya the event
also honoured space pioneer and former
American astronaut, Dr. Buzz Aldrin, who
was the lunar module pilot on Apollo 11,
the first manned moon landing in history.
An agreement with Viasat was signed
to develop and launch a dedicated
Machine-to-Machine (M2M) platform
combined with M2M specific products and
commercial packages.
M2M will be a key growth engine for
satellite services over the next few years.
Thuraya envisions being a key strategic
player in this development.
The Thuraya IP Commander, our first
rugged satellite broadband terminal
designed using military specification
components, was launched this year. The
terminal became commercially available
from all Thuraya Service Partners in Q3,
2014. Developed in collaboration with
US-based SRT Wireless, the IP Commander
is engineered to enable mission-critical
voice and data connectivity in mobile or
stationary applications in the most extreme
and remote environments.
Etisalat
35
Etisalat Services
Holding (ESH)
Management Review
ESH aspires to create innovative products and services that
address the needs of our customers both locally and
internationally
2014 has been a successful year for Etisalat
Services Holding (EHS) that is strategically
positioned as an independent service
provider to deliver value added telecom
related services to the group as well as to
external business entities. ESH’ portfolio
consists of eight companies working across
a wide spectrum of industries providing
state-of-the-art products and services,
innovative and disruptive technologies,
and addressing the needs of the telecom,
government and private sectors in the UAE,
the Middle East and globally.
In 2014 ESH conducted a comprehensive
benchmarking exercise and identified
areas of new opportunities, implemented
the EFQM Excellence Model in five of our
companies, and evaluated synergies across
our companies to create new products and
services. We also implemented programmes
for employee motivation and engagement,
including spot awards; employee of the
quarter, and appreciation for outstanding
performance on projects; thereby paving
the way to making ESH one of the best
places to work in the Middle East.
These initiatives aspired us to innovate
tools that will add value to our clients’
businesses in the coming year.
ETISALAT FACILITIES
MANAGEMENT
Etisalat Facilities Management (EFM)
provides a single point of contact to our
valued customers by offering integrated
facilities management solutions tailored to
our customers’ needs. We have progressed
further with several unique initiatives,
including Mabanina (the combination
of Energy Management and Facilities
Management) that established a consortium
with the Emirates Green Building Council
as well as a strategic alliance with Etihad
Esco. The aim is to increase awareness of
energy management, while also supporting
36
Annual Report 2014
new energy services companies in the UAE
through industry knowledge transfer, and
in some cases, financial investment.
A joint venture with Emirates Transport was
also established to cater exclusively to the
government sector.
In the coming year one of the key focus area
will be the healthcare sector considering
the market potential in the UAE and our
capabilities in offering healthcare providers
with innovative and customised solutions.
EMIRATES DATA CLEARING HOUSE
Emirates Data Clearing House (EDCH) is
one of the world leading clearing houses
offering comprehensive solutions to GSM
operators around the globe. In 2014, EDCH
focused on introducing value added services
like mobile money hub solutions and bill
shock prevention. We also expanded our
services into Asia with a new client base.
To refine the customer experience, EDCH
adopted a consultative approach towards
proposing new solutions to our customers
by ensuring active involvement with
our clients through dialogue, workshops
and regular surveys of their value chain
competence and how we can improve them
further.
The enhancement of our online reporting
via several dashboards for data, financial,
and roaming traffic was achieved this year,
in addition to the release of comprehensive
fraud management tools and reporting;
RAP out recovery; advanced RAEX, and TAX
recovery service.
EDCH also exhibited thought leadership by
hosting the GSMA Fraud Forum #60, which
took place in February in Dubai.
Our aim, in 2015, is to be the preferred
roaming and value added services partner
to global telecom operators.
E-MARINE
E-marine is the trusted principal provider
of submarine cable solutions in the Middle
East and Asia Subcontinent.
E-Marine entered the offshore energy
market in 2014 and invested in Vessel CS
SAMA, to be commissioned soon. Handover
of another vessel is expected in early 2015,
in a bid to enhance our market share and
service quality.
In response to the increase in customer
demand for spare storage, we have
expanded our storage facilities in Salalah,
Oman and the Hamriyah Free Zone, UAE.
This will give E-Marine an edge to become
the preferred choice for our customers in
the region.
TAMDEED PROJECTS
Tamdeed Projects is the UAE leader in
the field of mega Fiber to the Home and
outside plant projects covering network
consultancy; design, and deployment.
Tamdeed also offers service provisioning;
inside plant projects implementation; inbuilding solutions, and end-to-end turnkey
solutions.
In 2014, we again were the recipient of
multiple awards for business excellence namely ”The Peak of Success” under the
category of Display of Business Excellence
and we were internationally recognised by
bodies such as the World Confederation of
Businesses.
Tamdeed
introduced
several
new
initiatives, including turnkey offerings
to target new customers in the external
market. We also introduced the Annual
Maintenance Contract to UAE customers,
thereby enabling more value added
services. Tamdeed plans to cross-sell more
capabilities to strengthen relationships
with the existing customer base, while
simultaneously targeting new customers.
Tamdeed is also collaborating with other
companies under ESH to generate strong
synergies and introduce value added
products that will enhance revenue streams
ultimately through a more tailored range
of solutions.
ETISALAT INFORMATION SERVICES
Etisalat Information Services (eIS) is
considered the leading directory services
provider in the UAE. While the directional
media industry has been evolving, eIS has
identified potential avenues of growth
and is putting in place building blocks for
transformation to ensure leadership.
In 2015, eIS will focus on the digital media
advertising industry, which is expected to
grow at a CAGR of 38% over the next
few years. We have signed partnership
agreements with a number of global
players and are in the process of bringing
those tools to the UAE and localising the
content to ensure maximum reach to our
end users.
In 2015 eIS plans to offer multiple features
and functionalities through a consolidated
platform across multiple industry verticals
benefiting from the shift in the digital
advertising industry; thereby capturing
significant value for eIS and its stakeholders.
EBTIKAR CARD SYSTEMS
Ebtikar Card Systems (ECS) is a major
provider of smart card solutions. Established
in 1996, ECS is designed to fulfil the
market’s growing demands for smart card
applications .
ECS received certification by the GSM
Association’s
Security
Accreditation
Scheme for SIM/smart card manufacturers,
demonstrating Ebtikar’s ability to produce
high volumes of high quality SIM cards
while adhering to a strict set of standardised
security criteria. Ebtikar currently is in the
final stages of implementing ISO 14000
(Environmental Management) and Ohsas
18001 (Occupational Health and Safety
Management), along with the ISO 7810
and ISO 7816 (Identification and Smart
Card Management) to enhance product
quality.
2015 will be about enhancement of
production capacity to support growth
potential coupled with
aggressive
customer acquisition. Ebtikar is also
planning multiple new product offerings
like Machine to Machine and 4G/LTE cards,
which will not only ensure client retention
through cross selling, but will also enable
Ebtikar to move into new markets in a
focused manner.
ETISALAT ACADEMY
Etisalat Academy (EA) is the largest inbound and out-bound single sourcetraining provider for the Middle East for
telecommunications, technology and
business training. EA also offers human
resources and competency consultancy
training.
In 2014, EA launched a new Talent &
Leadership Centre (TLC) in partnership
with world-renowned organisations to
help develop leaders from local talent.
TLC programmes include: learning tours of
private and public companies in Europe,
America and South East Asia such as
Apple, Samsung and Siemens and Women
Leadership 2020.
with the prestigious United Arab Emirates
University (UAEU) to provide the Executive
MBA in EA facility in Dubai. This partnership
positions EA as the sole provider of this
product outside Al Ain and Abu Dhabi,
where the UAEU is based.
2014 also saw the introduction of a
new system for customer relationship
management and training delivery to
increase operational efficiency; automate
training, and provide real-time customer
intelligence.
Our overseas expansion saw the conclusion
of two major projects in Saudi Arabia.
Meanwhile, our local market is experiencing
tremendous growth after the signing of
the Mega Project with a local government
entity in the UAE.
ETISALAT REAL ESTATE
Etisalat Real Estate (eRE) oversees and
manages the portfolio of Etisalat properties
in the UAE. eRE introduced a new property
portfolio management system called
TRIRIGA that provides enterprise level tools
for space and asset management, tenant
management, staff location management
and movement, and third party integration.
eRE has initiated asset optimisation
activities for Etisalat properties in the UAE
to enhance efficient utilisation of office
space in order to optimise rental costs and
rent out vacant spaces to external clients
thereby improving revenue generation.
eRE is also considering the leasing of
open office spaces within business centres
and HQ buildings to enhance revenue
generation.
EA is also finalising plans to introduce
experiential learning for academic as well
as management trainees and has partnered
Etisalat
37
Africa
Africa
Maroc Telecom Group
Management Review
The Maroc Telecom Group constantly strives towards
innovation as well as enriching and adapting its products
and services to meet the evolving needs of its customers
The Maroc Telecom Group constantly strives
towards innovation, always enriching and
adapting its products and services to meet
the evolving needs of its customers.
In 2014, Maroc Telecom continued with its
unlimited rate plans in Morocco, offering
two to four free additional hours of talktime and 500 to 1,000 free SMS and MMS
messages. The Company also launched the
Unlimited Mobile for those customers who
communicate the most. This year also saw
the launch of MT Talk Pass. Designed to
facilitate access to social networks without
subscribing to a 3G Mobile Internet plan,
MT Talk Pass provides subscribers with
access to Facebook, Facebook Messenger,
Twitter, WhatsApp and MTV music
channels. It highlights our commitment to
the development of mobile content and,
in partnership with Anghami, serves as
Morocco’s first music streaming offer for
mobile users.
The enhancement of the customer
experience was also extended to our
professional and business customers with
Optimis and Business offer, which provides
free communication along with options
40
Annual Report 2014
for free hours, unlimited numbers, free
SMS messages, unlimited calls and texting
within a company, 3G Internet generous
volumes and extra national unlimited
numbers.
Maroc Telecom also exclusively launched
the MT-Track service for geolocation of
vehicles via mobile phone. This service
enables businesses to monitor their fleet
and runs on any mobile device, without the
need for GPS or data subscription.
Our year of enhancements extended
to include TV service over ADSL with
the introduction of our new thematic
channels: education, information, nature
and discovery, entertainment and cinema.
We also improved our Video On Demand
service by including best TV series and
children’s content.
Mobicash, our innovative M-payment
solution launched in 2010 continued its
momentum and growth this year. We
were the first operator to launch this
game-changing service in Morocco and
the region, allowing our customers to
deposit, withdraw and transfer money
in Morocco and abroad, pay bills, top-up
Jawal and Manzil Pass, and make purchases
from authorised dealers. These services
are particularly useful for customers who
don’t have a bank account or are seeking
increased mobility.
Making 3G Internet accessible to our
customers is a top priority for us at
Maroc Telecom and we are continuously
working
on
enhancing
customer
experience by extending and upgrading
our
telecommunications
network.
Substantial investment amounting to
MAD 15 billion was planned for the period
2013-2015 for an extensive networks
renovation. This commitment applies to
all of our mobile-network infrastructures
and entails the radical modernisation of
existing technologies. The majority of our
current mobile access facilities need to be
replaced with Single Radio Access Network
equipment, the most advanced technology
to date. Through the installation of this
equipment, we will effectively increase
the performance of our services and can
ultimately accommodate 4G more easily.
For fixed-line access, the Multi-Service
Access Node equipment is deployed in
PANTONE 3005 PC
C = 100
M = 34
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PANTONE 1505 EC
C =0
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close physical proximity to our customers.
Furthermore, Fibre to the Home was also
launched this year with speeds of 100
Mbps.
and President Ibrahim Boubacar Keïta. This
cable strengthens the connectivity of our
subsidiaries by increasing the bandwidth
available to them.
One of our primary focuses at Maroc
Telecom is building customer loyalty and
our points-based loyalty scheme, Fidelio
was the first of its kind to be introduced
in Morocco. Fidelio allows our postpaid
customers to accumulate points on the
basis of billable spending and rewards
them with free or discounted handsets as
well as free talk-time and SMS messages.
To thank our customers for their loyalty,
we organised several sports- and musicthemed raffles throughout the year at
major national and international events.
Maroc Telecom Group has additionally
launched several projects to raise the
competitiveness of its subsidiaries to an
international standard. These projects
included
implementation
of
cost
accounting, a system of pooling purchases
and inventory cost optimisation.
Maroc Telecom continues to develop
synergies with its subsidiaries aimed
at promoting investment and sharing
technology and operational expertise. The
Trans-African - an almost 5,700 km fibre
optic cable linking Maroc Telecom with its
subsidiaries in Mauritania, Mali and Burkina
Faso - is almost complete. The Malian
section was inaugurated in February 2014
by His Majesty the King, Mohammed VI
Maroc Telecom and its subsidiaries
constitute a unique network providing
lower roaming charges. Nomadis, launched
in 2010, ensures that all of Group roaming
customers are charged domestic rates while
using one of our networks in Morocco,
Mauritania, Burkina Faso, Gabon and Mali.
We
believe
Information
and
Communication Technologies (ICT) is one
of the engines of sustainable economic
growth and an essential tool for improving
the living conditions of people everywhere.
It is our ambition to expand ICT access
to everyone. To this end, we are using all
available technologies to cover the most
remote regions and ensure that our offers
are accessible to our low-income segment.
We now successfully cover over 7,000
isolated areas within the framework of
the Program for Universal Telecom Access
(PACTE) as well as 20,000 other isolated
areas beyond PACTE’s reach.
Maroc Telecom’s environmental policy
underlines our dedication to reduce direct
and indirect emissions of greenhouse
gases; the struggle against climate change;
improvements in waste treatment; the
reduction of visual pollution at technical
sites;, and the awareness and promotion of
environmental protection. Our continued
efforts strive to reduce the consumption of
electricity and raw materials through the
use of renewable energy; the installation
of free-cooling ventilation systems at
technical facilities, and the promotion of
paperless processes.
In 2015, we aspire to continue to promote
growth through evolution and innovation
while remaining true to our moral compass
and committed to our social responsibility.
Etisalat
41
Africa
Etisalat Nigeria
Africa
Atlantique Telecom
Etisalat Nigeria’s ongoing commitment to high quality service
and network, improved customer experience and strengthened
the Company’s market position
Atlantique Telecom focus in 2014 was on providing unmatched
service quality with emphasis on growing e-commerce services
and expanding coverage of our mobile data services
This has been a remarkable year for Etisalat
Nigeria with key achievements in terms
of growth in revenue and market share;
highlighting the Company’s ongoing
commitment to providing customers
with the quality service they deserve, and
keeping to Etisalat Group’s tradition and
mission.
Atlantique Telecom Group (AT) is
geographically represented in the six
African countries of Benin, Ivory Coast,
Gabon, Niger, Central African Republic,
and Togo. The group’s focus in 2014 was
on enhancing customer experience and
providing unmatched service quality.
One of our more noteworthy innovations
of 2014 was the development and launch
of Cliqlite. Cliqlite provides safe and easy
access to Internet sites; gaming and social
networking sites, as well as e-learning tools
for minors. It has been developed with a
strong parental control feature that ensures
security while browsing the Internet.
Cliqlite has been heralded as an opportunity
to contribute to Nigeria’s educational
development by zero-rating access to
pre-selected educational websites. Cliqlite
has received endorsements; accolades,
and support from key stakeholders across
the country, including the Nigerian
Federal Government; the Lagos State
Government; parents, as well as education
industry watchers in Nigeria. In addition,
Cliqlite has been positively received by
school administrators with many schools
partnering with Etisalat.
Etisalat Nigeria undertook a study on the
data consumption behaviour exhibited by
customers across the network. The study
revealed the preferences (social networking,
chat, and video) of customers with an
emphasis on time spent and preferred
services. By analysing the volume of data
that customers consumed on popular
services and apps like Facebook, YouTube
and WhatsApp for instance, the company
was able to determine what services were
most important to customers. In response
to this study Etisalat Nigeria launched
Smartpaks, an app-based plan that provides
customers an easy way to understand how
to purchase data plans for their specific
42
Annual Report 2014
needs. Customers only need to select
the Smartpak that suits their needs from
three variants focused on popular chat
apps, social networks and video streaming
content.
Another 2014 critical project for the
distribution channels team was Auctus. The
objective of Auctus was to create a sales
channel that can exploit the full extent
of the network coverage; customers’
strong preference for the brand, and
deliver Etisalat value proposition distinctly
from competition by enhancing channel
capability, improving visibility to retailer
level transactions, and increasing service
capable touch points. Successfully launched
in 2014, project Auctus has recorded
significant results with an approximate
growth rate of 20% in pipeline sales;
increased capacity utilisation and usage
in lagging clusters, and visibility across
40,000 retailers nationwide.
Our digital media team has had an exciting
year with the launch of several products
that have helped demonstrate Etisalat’s
customer centricity and innovation. Easy
Credit was launched in the second quarter
of the year and provides Etisalat subscribers
with access to advance airtime that can
be used to make calls or browse the web.
Customers then simply repay when they
next recharge. Since its launch, the service
has been well-received by customers,
with over five million subscribers taking
advantage of the service to date.
During the second quarter of 2014, Etisalat
Nigeria also launched the Interactive
Voice Response (IVR) tool, an automated,
fully-interactive, self-service voice menu
that provides quick solutions to the most
common customer complaints. As a result,
excellent customer adoption has been
recorded with over 20% increase in selfservice rate and a reduction in call volumes
to the call centre – from 400,000 calls to
60,000 calls daily. This has been a win-win
for customers and Etisalat.
In a first in the Nigerian telecom arena, our
digital media team launched an exciting
new video ringtone service, Vringo in Q3
2014. Vringo allows subscribers to replace
their regular ringtone with a video of their
choice. This innovative service has also
been backed by a library of exciting local
and international content covering music;
movies; sports; comedy, and more.
Etisalat’s Vidyo video conferencing solution
is assisting corporates customers in bridging
the distance gap between them and their
clients, staff and business partners alike. The
result is improved customer engagement;
unified communication, and reduced
associated costs for training and distance
learning. The Vidyo video conferencing
solution has presented Etisalat as a
solution-oriented operator. This solution
has helped Etisalat gain more market share
in the enterprise segments. evidenced by
more customers willing to connect to the
Etisalat network.
As part of the Company’s efforts to increase
network coverage and capacity which is
already rated number one for quality of
service by the Nigerian Communications
Commission (NCC) and to accelerate roll
out of 2G & 3G coverage and new services
to its customers, Etisalat signed a tower sale
and leaseback agreement with IHS holding.
This was the first tower transaction by a
major GSM operator in Nigeria.
In 2015, Etisalat Nigeria endeavours to
continue to build on the growth momentum
witnessed in 2014 in terms of growth in
subscribers and the set financial KPI’s. This
will be attained by providing customers
with even more reasons to connect with
Etisalat through innovative products and
services, a quality network and excellent
customer service.
The year began with the launch of 3.75G
in Benin, the fastest mobile broadband
service in the country. Our free web
browsing packages on Wikipedia, Bing and
the AT website coupled with our key social
package offering of WhatsApp, Facebook
and Twitter highlight our ongoing
commitment to engage and enhance the
lives of our Sub-Saharan customer base.
Founded on the belief that we are only as
strong as our team, the Winfiol system was
established to empower our front office
and call centre team members. The system
ensures the real time management of
customer queries and complaints, of which
99% are now resolved at the first point of
contact. To further enhance the customer
experience, we introduced Qmatic, an
automated queuing system geared to
attend to customers. Qmatic has enabled
us to remotely manage each branch
based on their specific query and profile;
efficiently monitor customer satisfaction
in our outlets, and effectively assess
human resource issues in the front office
and service quality in remote locations.
A year has passed since the launch of our
pioneering mobile money service in Togo,
Flooz, and today, we are still the only
operator offering this game-changing
utility service. We enhanced Flooz’
functionalities with cash in and cash out;
money transfer; payment of electricity
bills for postpaid and prepaid customers;
payment of university tuition; payment
of insurance fees; merchant payments,
and airtime purchases. Our most critical
addition is the payment of salaries. We
have signed an agreement with the UN
organisation, Plan Togo, to administer
the salary payment of over 16,000
individuals living in the most remote areas
by providing them with MoovSIM cards.
We have successfully recruited additional
partners such as the US Embassy and the
United Nations Children’s Fund to further
our initiative and to date over CFA Franc
1.5 billion has been paid through the Flooz
platform for outbound payments.
Our year of innovation extended to the
Central African Republic (CAR) where
we launched our Internet high speed
solution, Move Internet Haut Debit. For the
first time ever, our customers now have
access to affordable high speed Internet
everywhere. We also introduced SOS credit
to our loyal customers, where in the event
of an emergency, customers can access a
temporary and limited credit line that is
then deducted from their account at a
later date.
In Côte d’Ivoire (CDI), our focus has been
on female customer base through our
exclusive Weena service. Subscribers to
Weena get free member to member calls,
per second billing, complimentary Flooz
account for every member, plus a host of
other benefits specific to their professional
activity. In return for using this service,
Weena members have to guarantee a
certain level of monthly revenue per
member. Launched during the first quarter
of 2014; Weena boasts approximately 5,000
subscribers to date and was nominated at
the GSMA Mobile World Congress awards
in Barcelona.
Management Review
of our service on their Android device. Flooz
Appli is supported by a comprehensive
communications campaign across social
media where customers can share
experiences and testimonials.
Our customers remain the drive behind
everything we do and to that end, we
extended our customer call centre hours
and now operate 24-hours a day, seven
days a week. This positioned Moov as the
only operator in CDI to offer round-theclock customer service, ensuring improved
customer care and support availability.
Spreading across Central Africa, Flooz
was also introduced in Gabon where a
solid distribution network and aggressive
launch campaign has positioned it as
another pioneering service. Our Gabon
Facebook fans reached 28,000, which
currently represents the country’s highest
penetration rate in the youth segment;
a segment that continues to enjoy the
benefits of our tailor-made rewards scheme,
Epiq Nation. Having undergone a series of
improvements in 2013, Epiq Nation now
has over 50 partners across the country
and in addition to its existing services, now
offers the youth market a special tariff plan
at CFA Franc 1 per second in a closed user
group with free minutes, SMS and Internet,
based on usage.
In 2015, Moov operations under Atlantique
Telecom aspires to build on our winning
customer-centric focus by committing
ourselves to new and bolder innovations
and a deeper and broader market
penetration that further strengthen our
position as a leading telecom operator in
West and Central Africa.
We have also enhanced Flooz service in
CDI with Flooz Appli, a free app that gives
customers quick, easy and full functionality
Etisalat
43
Africa
Zantel
Africa
Canar
Enhancing customer experiences through launching services
and strategic partnerships that enable Zantel to expand its
digital footprint
Canar continues to improve its processes and enhance its
solutions and services to add value to our customers and help
businesses grow
In our ongoing commitment to provide
affordable, accessible and seamless
telecommunication services to our
customers in Tanzania, Zantel has
deployed and launched 3G services. By
offering our customers an uncongested
network, we have successfully enhanced
our customer experience and increased
customer acquisition across the mainland.
Recognising the power of strategic
partnerships in the expansion of our
digital footprint, Zantel this year signed
a Memorandum of Understanding with
Tanzania Posts Corporation (TPC). This
agreement has provided Zantel access to
over 100 TPC branches, thereby enhancing
our distribution channels and increasing
our reach in providing a more accessible
product and service offering to our
customers.
This year marks several pioneering
achievements by Canar in Sudan
cementing our foothold in the market and
building on our growth and aspiration to
be the first choice for customers. Governed
by customer-centric principles, our team
of qualified professionals are connecting
customers and businesses and striving to
serve them better than ever before. With
the launch of our spam filtering services
and Internet service control, along with
our managed wide area network and call
centres, Canar once again brought an
innovative product and service offering to
the Sudanese market. We also introduced
our co-location and infrastructure as a
service (Iaas) provisioning this year.
Our recent collaboration with the Zanzibar
Electricity Company provided our Zanzibar
44
Annual Report 2014
customers, constituting a major part of our
total customer base, the ability to purchase
electricity through Ezypesa, our mobile
money transfer service. This strategic
partnership has resulted in an enhanced
user experience and greater brand visibility.
In addition, our Ezypesa agents are now
able to access and replenish their virtual
accounts from various channels including
leading banks such as People’s Bank of
Zanzibar (PBZ) and CRBD Bank. This will
ensure that our Ezpesa customers have
more points of presence to transact hence
greatly enhancing their convenience.
Realizing the large potential in the
mainland of our country, Zantel launched
an aggressive marketing campaign aimed
at attracting quality customers into our
network. Our aim is to continue with this
initiative during 2015 while enriching the
offerings of our portfolio of products and
services in the mainland.
This year also saw a number of regulatory
developments introduced by the Tanzania
Communications Regulatory Authority
(TCRA). The just implemented New
Licensing Procedure Rules are designed to
streamline the tender process following an
announcement by TCRA stipulating to the
operators which radio frequency locations
are available and when. Additionally, new
regulations have been drafted highlighting
the requirements for listing Mobile
Network Operators on the Dar es Salaam
Stock Exchange. Looking ahead in 2015,
TCRA will also be launching mobile number
portability.
For Zantel, our mission in 2015 is to be
recognized as a value for money brand. We
aspire to achieve this by remaining true
to our core mission, which is to provide
affordable and innovative products and
services that aim to elevate the customer
experience.
In our bid to enhance the customer
experience, we have created a new
division within our enterprise sales unit
catering to our corporate customers. The
new dedicated call centre was established
by shifting the enterprise technical
support function from the OMC (NOC)
to the customer service unit as part of
the commercial team. This was further
enhanced by outsourcing the technical
support to a third party. As a result,
our enterprise customers now benefit
from a streamlined and exclusive service
that enables our account managers to
Management Review
focus their attention and efforts more
effectively.
Credit Control policy extending the
current repayment period.
For the sole purpose of further enhancing
our customer service, our technical team
has implemented another step toward
delivering an excellent QoS. By defining
a set of Key Quality Indicators for
Canar’s different services offerings, we
can regularly monitor service trends to
proactively preempt customer complaints.
Since our inception in 2005, Canar has
strived to improve and streamline our
processes with the aim of bringing more
value to our customers and allowing
businesses to grow. Testament to this
vision lies in our e-procurement initiative
that revamped Canar’s tendering process
starting from the initiation of the tender
straight through to the final approval.
To rectify a frequent service shutdown
issue, we identified an optical bypass to
be a viable, cost-effective solution to
be connected at the metro rings. This
enhancement of metro service uptime
aims to resolve a customer’s dropped call
due to having a second customer on the
same ring shutting down the power.
In an effort to improve work flow, a
Business Process Mapping automation
system was introduced to facilitate
our operation’s processes ensuring
effectiveness and efficiency.
In addition to our existing point of sale
payment options, Canar now provides
our customers even greater flexibility
to purchase vouchers and pay their
bills through a network of 3,000 ATM
machines. We also introduced our Flexible
Although fixed voice was impacted by
the stiff competition from other mobile
operators and the fixed to mobile
substitution phenomena, broadband
penetration in the country remains low
providing ample opportunity for growth
of the fixed line segment. In addition,
demand for ICT services and solutions is
expected to grow in the coming years and
Canar is well posi-tioned to play a critical
role in providing these services and benefit
from potential growth.
Looking forward, Canar aims to build
on the milestones gained in 2014 and
introduce further initiatives and an
enhanced customer experience in Sudan
in the years to come.
Etisalat
45
Asia
Asia
PTCL Pakistan
Asia
Ufone Pakistan
The key to PTCL’s broadband leadership is our bespoke
solutions supported by unparalleled network capabilities and
nation-wide presence
Ufone was the first operator in Pakistan to launch 3G
commercial services and accelerated mobile data adoption
in 2014
Growing consumer awareness and demand
for data has seen PTCL launch a number
of innovative data products and services
during the year; helping it cement its
position as Pakistan’s leading integrated
telecommunications provider.
In 2014 Pakistan witnessed the auction
of 3G/4G spectrum and the launch of 3G
services in the country. Ufone was one
of four mobile operators to bid in the
country’s initial 3G auction and was the
first operator to launch 3G commercial
services in Pakistan.
PTCL adopted a strategy of collaboration
with existing wireless local loop (WLL)
operators
and
signed
agreements
with TeleCard and WorldCall to utilise
their spectrum. The spectrum acquired
supported PTCL’s launch of 4G services in
Pakistan and carrier expansion across the
EV-DO (Evolution Data Optimised) network
adding value in terms of product, brand,
capacity, and quality.
In order to cater to customers’ increasing
bandwidth requirements, PTCL upgraded
its submarine cable systems in Asia-AfricaEurope 1 and South East Asia – Middle
East – Western Europe 4. The recent
3G/4G spectrum auction along with the
increase in data usage preferences of
customers have opened up new avenues
for business growth and diversification.
Service providers are facing challenges
such as network congestion, coverage and
Quality of Service (QoS) related issues. In
order to address these challenges, Carrier
and Wholesale Services (CS&W) has taken
the initiative of deploying hotspots in high
footfall areas in major urban centres.
Our unparalleled network capabilities
and country-wide presence make PTCL
the broadband market leader in Pakistan.
Various products and services were
introduced in 2014 to provide customers
a broadband connectivity that is not only
reliable and faster, but affordable. EVO,
PTCL’s 3G-enabled wireless broadband
48
Annual Report 2014
service, has become synonymous with
high-speed wireless broadband Internet in
Pakistan and continued to grow in 2014
both in terms of revenue and subscriber
base. One of our foremost achievements is
the Broadband 4 Mbps for All as well as our
Charji EVO campaigns that were launched
for wireline and wireless customers
respectively.
Our most significant launch in 2014
was our high-speed Charji EVO service
providing ultrafast connectivity of up to
36 Mbps, the fastest wireless broadband
service in Pakistan. Charji EVO has received
a positive response from the market even
with the launch of 3G and 4G services by
other mobile operators. Additionally, a high
speed offering will enable customers to
enjoy multi-play services in the future on
our wireline broadband network.
PTCL’s Smart TV service continues to grow
at a fast pace. Our 2014 customer base
increased by 50%, a growth made feasible
by the enrichment of content as new
products roll out. In line with international
trends, we also launched Over-The-Top
services that enabled multi-screen TV
viewing in Pakistan allowing customers to
watch live TV programmes and on-demand
content on personalised screens without
any location restrictions or limitations.
PTCL launched the Landline and Broadband
Reconnect Campaign seeks to reconnect
churned customers. Discounts were
offered to churned customers, giving
priority to those who had churned for a
longer duration. This campaign provided
an excellent platform to win back a total
of approximately 40,000 landline and
broadband customers.
In order to provide our customers with
practical knowledge for trouble-shooting
basic issues we have established a Contact
Centre with professional tutorials and
trouble-shooting videos available on the
myPTCL portal, company website and
across social media. We also provide email
support and have a dedicated team of
agents available on the web-chat portal
for customers requiring instant resolution.
These initiatives have enabled customers
to successfully trouble-shoot on a personal
level and decreased their dependency
on helplines, which ultimately, means a
reduction in call loads to our helplines.
We are committed to deploying stateof-the-art energy solutions that provide
round-the-clock services to our valued
customers irrespective of Pakistan’s
existing power crisis. Some of these
initiatives include the provision of solar
power at a number of sites as well as a
windmill project. We also provide fast
charging battery solution for sites, battery
backup solutions, replacement of battery
banks and deployment of inverter-based
air conditioners rather than conventional
air conditioners to reduce operational
expenses.
Being the only unified service provider in
Pakistan serving all segments of customers,
PTCL’s aspirations for 2015 remain focused
on providing sustainable and innovative
solutions tailor-made for our customers
that ensure our continued market leader
position in Pakistan.
During 2014 Pakistan Telecommunications
Authority (PTA) published timelines for
biometric-based verification of telecom
subscribers, as part of the Pakistani
government’s enhanced checks on the
sale and activation of mobile SIMs. Ufone
successfully enabled four major channels
for the Biometric Verification System (BVS)
based processes; service centres, franchises,
retailers and priority service executives.
This was achieved well-within the
agreed timelines for the business units to
continue their activities uninterrupted in
a post-BVS era.
Ufone launched Super Card in 2014 - a
game-changing recharge platform that
rewards subscribers with monthly free
minutes (both on-net and off-net), SMS
and data. This has resulted in a simple onewindow solution for our customers while
also increasing the visibility of charging
elements. Super Card has shown a strong
uptake in the market and Ufone plans to
use the platform to introduce multiple
variants of the product.
The industry’s first mobile financial services
provider, Upaisa, was launched in the course
of the year. Upaisa acts as a debit card for
mobile wallet holders and can be used on
all 1-Link powered ATM machines as well
as thousands of UnionPay supported POS
machines nationwide.
In the wake of the launch of 3G, Pakistani
operators grappled with the issue of bill
shock for the new users of 3G services. To
mitigate the fallout of bill shock, Ufone
introduced the 1 MB offer. The 1 MB offer
introduced a step-charging mechanism that
only charged pay-as-you-go customers for
the first Mb of the day, with the subsequent
19 Mbs free for the rest of the day. The 1
MB Offer has substantially improved the
customer experience while keeping their
costs down and retaining them on Ufone’s
network.
Analysis of customer behaviour trends
presented Ufone with an opportunity to
optimse network utilisation. As a result,
Ufone launched the Mega Daily Internet
Bucket, offering unlimited volume between
the hours of midnight and ten o’clock in
the morning across both the 2G and 3G
networks.
Management Review
control all their connections under a single
account. In contrast to the traditional
management of a single connection under
an individual account, customers can
now create a single username account
for all of their connections. Customers
now enjoy complete freedom to access
any information, manage subscriptions,
and change the details for all connections
collectively.
With the close of another eventful year,
Ufone’s aspirations for 2015 remain
focused on growing the mobile data
segment, innovation and quality of service
by listening to the growing demands of the
market and serving our customers to the
best of our ability.
Before the advent of 3G, Pakistan’s 3G
handset penetration stood at 13% with
penetration hovering at 17% in today’s 3G
environment. While 3G is slowly making
inroads into people’s daily lives, the biggest
barrier to adoption remains the cost of
3G-enabled smartphones. Ufone designed
a 3G smartphone through various vendors
and developed an Android Jelly Bean
(upgradeable to Android Kit Kat), 1.2 GHz
quad-core processor smartphone for the
mass market with a price tag of USD 60.
With ample above the line support and
strong distribution, the device proved to be
an instant success.
Under the Project One Initiative, Ufone
enhanced the customer experience on
our Self Care Portal by enabling them to
Etisalat
49
Asia
Etisalat Sri Lanka
Asia
Etisalat Afghanistan
Etisalat Lanka focus remains on providing a unique customer
experience through competitive pricing, innovative solutions
and a high quality network
Enriching the customer experience through enhanced and
improved network quality has ensured Etisalat Afghanistan’s
progress in a highly competitive environment
Innovative technologies have presented
Etisalat Lanka with opportunities of
providing our customers with new products
and services they consider to be essential
in their lives. Following years of doubledigit growth rates, the Sri Lankan mobile
industry has entered into a phase of stable
growth with penetration reaching 100%
in the voice market. As a market with a
regulated floor price governing the local
call and messaging rates, Sri Lanka’s pricebased competition has moved to IDD and
Data where below-cost offerings are not
uncommon. With data penetration levels
at approximately 20%, Data is seen as
the main driver of growth in the years to
come and Etisalat Lanka aims to harness
the immense growth potential through
migrating voice-only customers to voice
and data. With a fully IP-based backbone
and the fastest 3.75G network across the
island, we are well equipped to be a strong
player in the nation’s data growth.
As the telecommunications sector
in Afghanistan enters into a higher
competitive phase through the arrival
of a fifth operator, Etisalat Afghanistan
increased its affinity to its customers
through attractive pricing; improved
network performance, and key innovative
products to help drive our focus on new
acquisition as well as existing subscriber
base retention.
A key highlight in Etisalat Lanka’s innovative
product offering was the launch of our
Super SIM in the first quarter of this year.
Super SIM ensures customers are billed
on the duration of their calls based on a
per-second charge, with a complimentary
additional 12-second talk-time per minute.
To further enhance the product offering, we
also launched Super Data and Super IDD.
Earlier this year, Etisalat Lanka became the
first mobile operator in Sri Lanka to receive
the GSMA accreditation for High Definition
Voice. We now rank among the 26
international mobile operators that meet
the internationally-recognised criteria
50
Annual Report 2014
related to noise cancellation; voice clarity,
and multiple technical features. Etisalat
Lanka is also the only mobile operator in
the South Asian region to be included in
the GSMA HD Voice Ecosystem.
We are Sri Lanka’s first mobile operator to
collaborate in the M-commerce business
and integrated two M-Commerce platforms
with our own. As a result, Etisalat Lanka
now provides our 4.5 million-plus customer
base with an unparalleled advantage to
engage in M-Commerce transactions with
over 18 million mobile subscribers across
Sri Lanka.
We also extended our services to an
estimated 250,000 Sri Lankan expatriates
living and working in the UAE through the
provision of innovative mobile solutions
offering competitive market rates for
Calls, SMS and Data by leveraging our
relationship with Etisalat Group.
Pursuant to and in keeping with our
ongoing provision of innovative products
and services, a number of collaborations
with various government entities are
in effect; most recent of which is our
partnership with the Department of
Pensions. Sri Lanka’s current pensioner
population stands at 600,000 and to reach
and cater to this demographic, Etisalat
Lanka launched an exclusive product and
services bundle-offer designed to cater to
their specific needs. Our Smart Pensioner
initiative is a tribute to our commitment to
all Sri Lankans.
Social Media is one of the highest
engagement communication channels
for Etisalat Lanka with over two million
Facebook users. In celebration of the World
Social Media Day, Etisalat Lanka hosted
Mashable Social Media Day 2014 for the
third consecutive year. The Colombo event
was listed among the world’s top eight
social media day events by Mashable.
Etisalat Lanka continues to be driven by
competitive pricing, innovative service
offerings and a high quality network
with improvements in customer service
encouraging a spirit of loyalty as the focus
remains on providing a unique customer
experience.
Founded on Etisalat’s belief that customers
are always winners, Etisalat Lanka designed
several reward promotions, including Game
of Tunes for loyal users of Personal Ring Back
Tones. The three-month long promotion
rewarded customers with daily and weekly
cash prizes, with the grand prize being a
brand-new SUV. We also gave away a one
million LKR cash prize to the grand winner
of the April seasonal promotion.
As we seek to build on the successes
of 2014, our focus in 2015 will be on
enhancing customer experience, as well as
improving efficiency and optimising cost
structures. Moving forward, our record
for innovation in the market remains
our strategic benchmark. Our innovative
solutions will influence mobile usage and
positively impact the community through
the launch of value-added products and
services catered to customers’ needs and
preferences.
In 2014, we at Etisalat Afghanistan focused
on our network expansion efforts and rolled
out a series of technological upgrades and
innovative products to boost our market
and customer base. With our 2G network
operational across Afghanistan, we are
growing our 3G network and currently
cover 20 provinces.
The customer experience was further
enhanced through the introduction of
a wide range of attractive on net bundle
offers, including new data bundles. With a
view to expanding our regional footprint,
Etisalat Afghanistan launched an intensive
sales micro marketing programme aimed
at new customer acquisition; improving
revenue, and reducing churn. Focused
efforts were made to enhance our enterprise
customer base, which subsequently led to a
140% increase.
We continued to enhance our loyalty
programme through new reward schemes
and events to heighten and enrich the
customer experience; to increase product
awareness, and to engage users. Our
management met with the Top 20 High
Value Customers; Top 20 Data Customers;
Top 20 Enterprise Business Customers,
and Top 20 Retailers. The one-to-one
interaction provided valuable insights into
the customer’s preferences, needs and
requirements.
Management Review
several governmental ministries in tandem
with local banks created a successful Salary
Payment project, simultaneously providing
customers with various M-Commerce
services.
We believe the future lies in improved
communication services leading to better
opportunities and better living. As an
operator, we aspire forward to improve
customer experience by ensuring improved
network quality and coverage, affordable
pricing and more innovative products.
In an effort to identify and resolve the
root cause of customer grievances, Etisalat
Afghanistan successfully reduced customer
complaints by almost 64% this year. Our
customers’ call waiting time at the call
centres was also reduced by 78%, with
an average waiting time reduced to 11
seconds.
In a year focused on customer centric
improvements,
Etisalat
Afghanistan
successfully
fostered
relationships
with various government entities and
socioeconomic
organisations.
Our
alliances with USAID; the Afghan Ministry
of Women Affairs, and the Electricity
Distribution Company of Afghanistan saw
the implementation of Mobile Money
services. While collaborative initiatives with
Etisalat
51
Awards
Marketing and Customer Care
2012
2013
2014
GSMA Global Mobile Awards
Best Mobile Product and Service
for Women in Emerging Markets
Mobile Money Global Awards
Best Bank Led Mobile Money
Programme (Egypt)
TeknoTel Awards
Best Customer Care
International Business Awards
Best New Product or Service of
the Year Health
Mobile Money Global
Best Mobile Money Deployment
in the Middle East
Corporate
2012
2013
2014
International Business Awards
Corporate Social Responsibility
Programme of the Year
CommsMEA
Best Overall Operator of the Year
Telecom World Middle East
Awards
Best Operator
9th Annual CommsMEA Awards
Overall Mobile Operator
Arabia CSR Awards
First Runner-Up in NGOpartnership
9th Annual CommsMEA Awards
African Mobile Operator
Forbes Middle East
Most powerful company in the
UAE
TMT Finance MENA
Best Deal of the Year
TMT Finance MENABest
Innovative Technologies
9th Annual CommsMEA Awards
Telecom Deal of the Year
Managemant
Good is never enough for us
52
Annual Report 2014
2012
2013
2014
International Business Awards
Best Executive of the Year in
Telecommunications
Arabian Business
CEO of the Year
5th Asia Best Employer Brand
Awards
Best Employer Brand
Etisalat
53
Human Resources
Management Review
Nurturing of talent at all levels will be the determining factor
in realising our vision to be the leading and most admired
telecom group in emerging markets
At Etisalat, we believe the nurturing of
talent at all levels will be the determining
factor in our ability to achieve results, grow
our business and to realise our vision to
be the leading and most admired telecom
group in emerging markets.
Over the course of 2014, our leadership
portfolio
has
been
complemented
with the addition of two new Best-inClass development programmes: the
Core Leadership Programme (CLP) for
middle management, and the Global
Leadership Programme (GLP) for executive
development. These come in addition to
the execution of our second Group-wide
High Potential Leadership Programme
(HiPo). These programmes help our talent
pools to be the best they can be; from
growing their functional skills and market
knowledge linked to our business strategy
and priorities, to developing the leadership
skills required now and in the future.
Our Talent Acquisition function focus on
ensuring that the Group functions are staffed
with best-in-class specialists who are able to
set the agenda and govern the operations
within their areas of expertise. Talent
Acquisition teams across our footprint now
work in tandem with our strategic sourcing
capability building, delivered during 2014,
and receive regular tactical support through
Yammer, our newly-introduced social
enterprise network.
Etisalat’ UAE continued commitment
to supporting the progress, learning &
development of UAE nationals is part
of a wider approach to develop local
communities. Nurturing National talent
and investment in enhancing the skills and
capabilities of UAE nationals remains a key
strategic priority.
In 2014, Etisalat UAE has the distinction
of maintaining a high Nationalisation
rate of 47% of its workforce. Our Human
54
Annual Report 2014
Resource strategy is well aligned with
Ministry of Presidential Affairs, under
“Absher” initiative with a commitment to
recruit & develop 1,400 UAE Nationals.
In this regard, Etisalat participated in five
career fairs in the year; more than 300 UAE
Nationals were provided the opportunity
for internship and work placement as well
as summer training. Another focus area was
people capability building programs that
supported long term skills development.
As a result more than 3,000 unique staff
trained with 5 training days per staff.
We continued to develop our International
Assignment programme to be more
cost-effective and have forged stronger
links
between
Talent
Acquisition;
Global Mobility; Succession, and Talent
Management. There is now a greater
collaborative focus on career planning and
management. New tools have been rolled
out including the Assignment Management
Solution and Talent Bank software. By
working closer together, we have been
able to identify, recruit and deploy top
talent to our Operating Companies (OpCos)
where the assignees have continued to add
value and provide knowledge transfer as
well as develop their own technical and
managerial skills. The Global Mobility of our
assignees is one of the pillars of our Talent
Management approach and is seen as a
valuable tool in deploying, developing and
retaining top talent. By actively managing
our assignees and working closely with key
stakeholders, we have optimised assignment
management resulting in a more effective
and efficient business model.
In 2014, we successfully conducted the
4th annual HR Excellence programme,
based on the European Foundation for
Quality Management (EFQM) methodology.
Thirteen OpCos managed to improve their
HR Excellence score year-on-year, three of
them proudly reached international levels
of excellence. This programme was also a
great opportunity for the Etisalat Group
to foster collaboration across all OpCos
and functions and to share best practices
group-wide. The 5th HR Excellence
programme has already started with an
improved format that increases efficiency.
HR Performance Management has become
instrumental in delivering our strategy
as the Etisalat Group’s objectives are
now shared and aligned across all OpCos’
executives. This maximises group-wide
collaboration; delivers greater results, and
realises our strategic vision.
Employee engagement continues to
occupy prime position in the priorities of
management. The Etisalat Global Employee
Survey was conducted for the second
year across all OpCos with nearly 80% of
the staff responding to the survey. The
survey is being conducted as part of a
five-year programme to enhance employee
engagement and, by extension, business
performance across the Etisalat Group. The
annual survey has been well-received by our
staff, who regard it as an excellent driver
of required change and an opportunity
to voice their views and opinions for the
attention of management.
One of the outcomes of the previous year’s
survey has resulted in the design of a Global
Values Framework for the Etisalat Group.
Designed following extensive consultations
with all stakeholders, including customers
and staff, the Global Values Framework is
aimed at enhancing and cultivating the
One Etisalat Family concept across the
Etisalat Group. The One Family concept is
part of the Etisalat Corporate Strategy and
a key component of the People pillar.
We strongly believe that our people are a
key strategic pillar to our long term growth.
In 2015 we will continue to develop and
enhance the capabilities of our talent pool.
Etisalat
55
Corporate Social
Responsibility
Management Review
Etisalat has continued to leverage its technological expertise
and network capabilities to help address the challenges of
communities within the Group footprint aiming to create
long-term value
Etisalat’s ongoing investments and
commitment to corporate social
responsibility have been focused on
improving the communities in which we
have a presence. Embracing its CSR efforts
with the same passion and leadership it
brings to every part of Etisalat’s business,
2014’s key CSR efforts have strived to
empower the communities that Etisalat
serves in the Middle East, Africa and Asia.
This has been through various ‘Mobile for
Development’ initiatives that aim to provide
commercial mobile services to people in
emerging markets and particularly in areas
with limited access.
To further this goal, a number of CSR
initiatives were undertaken during the year
to address local economic development;
education; environment; health and
personal finance.
In the UAE, the Go Green initiative
converted over 99% of post-paid customers
to e-Bill, stemming from its environmentally
conscious convictions. Additionally, Etisalat
UAE contributed the net proceeds from
21 auctioning campaigns that support
charitable activities including the H.H
Sheikh Mohammed bin Rashid’s Ramadan
Yearly Charity Campaign Committee
campaign to provide clean drinking water to
5 million lives. Etisalat UAE’s CSR activities
support the nation’s vision to be “the world’s
capital for humanitarian relief work”
Etisalat’s ‘mobile for development’
programme, Weena, expanded rapidly in
2014 and is now available in Togo; Benin;
Cote d’Ivoire; Nigeria; Afghanistan, and
Pakistan. Throughout the year, Weena has
positively impacted the lives of over 93,000
women employed as selling agents “Weena
agents”. The largest impact Weena has had
is on the lives of its end customers resource
poor women, organised in associations,
who own and use mobile phones and are
rewarded for that usage through a unique,
community-focused programme based on
Etisalat’s mobile money platform. Since
the service launch, over 1.3 million women
have been reached through Weena.
56
Annual Report 2013
In Benin, Etisalat is distinguished by
its
sustainable
social
engagement
programme, especially in the less fortunate
communities. It has invested in a variety of
education and health projects, such as the
commitment to build an amphitheatre and
several classrooms in Parakou, as well as
offering solar kits to more than 20 villages
in order to obtain free energy.
Another remarkable CSR programme is
Etisalat Misr’s Origin programme in Egypt.
Launched in 2009, this programme was
established to tackle water issues through
various elements inclduding connections;
purification and irrigation canals. Since
its launch, over a half million people have
benefited from Origin.
In Sri Lanka, 2014 saw Etisalat Lanka
successfully complete two additional
Knowledge Centres at Angulana and
Welimada bringing the total number
of knowledge centres to six - as part
of its continuing efforts to develop ICT
knowledge among school children. ICT
education has been an integral part of
Etisalat Lanka’s CSR initiatives over the
years, encapsulating its vision of giving
students access to knowledge through
various platforms, including the donation
of a fully-equipped library and other educational materials.
In an effort to combat maternal and infant
mortality while sustaining the company’s
innovative edge, Etisalat Nigeria has
introduced the use of Mobile Technology
in the provision of health services. The
mHealth service provides a solution where
midwives and healthcare providers use
technology to cap-ture, analyse, diagnose
and ultimately prevent clinical conditions
that lead to maternal and infant mortality.
In an effort to assist in a quick response to
the Ebola crisis, Etisalat Nigeria teamed up
with Samsung Electronics in September in
a bid to curb the spread of the deadly virus
by providing healthcare crews devices with
Etisalat SIM cards equipped with data and
airtime bundles. These measures are to assist
in the collection of data on individuals who
have been potentially exposed to the virus.
In addition to this timely reaction to
contain and eradicate Ebola in Nigeria,
seven Etisalat Group OpCos in Benin; Côte
d’Ivoire; Gabon; Niger; Central African
Republic; Togo, and Nigeria, partnered
with the Af-rican Union and other telecom
operators in a drive to support the fight
against Ebola in West Africa. The drive is
envisaged to combat the virus by using an
SMS-dedicated platform to raise funds for
the deployment of African health workers
to affected countries.
The focus of the CSR contribution of the
newest member of the Etisalat Group, Maroc
Telecom, has been to cover the remote
areas of Morocco to ensure accessibility
to low-income communities. By the end
of October 2014, Maroc Telecom provided
coverage to over 7,000 isolated areas
within the framework of PACTE (Program
for Universal Telecom Access) and over
20,000 areas beyond the PACTE programme
in Morocco. This initiative is in addition to
other CSR programmes Maroc has conducted including: internship programmes;
environmental initiatives, and community
support throughout its footprint.
Etisalat’s operations in Pakistan, Ufone
and PTCL, have also been a valuable
contribution to the Etisalat Group’s CSR
mission, with efforts focused on healthcare
initiatives; humanitarian responses to
the flood crisis in Sindh, and Tharparker
relief operations. Ufone and PTCL have
been involved in a number of educational
initiatives for underprivileged communities
in Pakistan, in addition to introducing
innovative power management and green
management programmes.
Recognising the importance of computer
literacy as an essential lifelong skill
in the 21st Century, Thuraya supports
Information City’s “Educate a Child, Build a
Nation” initiative. This initiative advocates
computer literacy for children in the UAE,
helping them develop literacy skills from
a young age. Com-puter literacy is an
essential.
Etisalat
57
Corporate
Governance
The General Assembly:
The General Assembly is composed of all
the shareholders of the Corporation, and it
exercises all its powers in accordance with
the law and the Articles of Association.
The General Assembly is entrusted with
approving the Board’s Annual Report on the
Corporation’s activities and financial position
during the preceding financial year.
The General Assembly is also entrusted with
appointing external auditors and approving
their report, discussing and approving the
balance sheet and the profit and loss account
for the previous year as well as the Board of
Director’s recommendation with regards to
the distribution of dividends.
Board of Directors:
The Board of Directors carries out the
Corporation’s business and, for that purpose, it
exercises all powers of the Corporation except
those reserved by the Law or the Articles of
Association for the General Assembly of the
Corporation.
The Board of Directors of Etisalat consists
of eleven members, seven of whom were
appointed, including the Chairman of the
Board, pursuant to the Federal Decree No.74
of 2012, appointing the Government’s
Representatives in the Board of Emirates
Telecommunications Corporation.
The other four members of the Board of
Directors were elected by National (nongovernment) shareholders who hold 40 per
cent of the Corporation’s shares.
The Corporation is committed to apply
best practices and corporate governance
58
Annual Report 2014
standards, taking into account best
international standards in this regard and
the applicable laws in the UAE. Therefore,
the composing of the Corporation’s Board of
Directors took into account the requirements
of the Ministerial Resolution No. 518 of 2009
Concerning Governance Rules and Corporate
Discipline Standards with respect to the
capacity of the Board members, where all
current Board members are non-executives
and independent.
Committees of the Board of
Directors:
There are currently three Board Committees
that have been established to assist the Board
with its responsibilities. Those Committees are:
1) Audit Committee,
2) Nominations and Remunerations
Committee and
3) Investment and Finance Committee.
Audit Committee:
As the Corporation is committed to abide by
best governance standards and international
practices, which are also compatible with
applicable Laws and Regulation in the UAE,
the Board of Directors has composed the
Audit Committee to support it in discharging
its duties.
The Audit Committee undertakes its duties in
accordance with its Charter, which complies
with the Ministerial Resolution No. 518 of
2009 concerning Governance Rules and
Corporate Discipline Standards. This Charter
is considered a delegation from Board to
the Audit Committee to undertake the
tasks mentioned therein, which include the
following:
• Ensuring the safety and integrity of the
Corporation’s financial statements,
• Reviewing and implementing systems and
internal control policies, and supervising
the Internal Control Department to
ensure that it is undertaking its duties
accurately,
• Monitoring the Corporation’s abidance by
the laws and regulations,
• Developing and implementing a policy
contract with the external auditor and
ensuring its independence and
• Reviewing financial control systems and
risk management.
The Committee’s Charter has clarified the
Audit Committee’s duties in detail, how it
shall be comprised, the conditions and the
quorum to convene its meetings and the way
it shall take its decisions.
The Committee is comprised of three (3) nonexecutive and independent members of the
Board of Directors, in addition to an external
member experienced in accounting and
finance. The Committee convene quarterly or
whenever necessary.
Nominations and Remunerations
Committee:
To implement governance best practices and
in compliance with applicable Laws in this
regard, the Board of Directors has composed
the Nominations and Remunerations
Committee to undertake its duties
according to its Charter, which complies
with the Ministerial Resolution No. 518 of
2009 Concerning Governance Rules and
Corporate Discipline Standards. This Charter
is considered a delegation from the Board of
Directors to the Committee to discharge its
duties mentioned therein.
The main objective of the Nominations and
Remunerations Committee is to ensure that
the Board of Directors is undertaking its
duties diligently and is complying with the
Governance Rules and Discipline Standards.
The Committee is also responsible for
organising the procedures regarding the
Nomination to the Board of Directors and
to constantly ensure the independence of
the members of the Board of Directors and
to report to the Board if any Board member
becomes no more independent.
The Committee is further entrusted
with developing policies with respect to
determining the Corporation’s needs for
talents at the level of executive management
and employees as well as developing policies
with respect to granting awards, incentives,
Board members’ remunerations and salaries
of the executive management and employees
in a manner that achieves the Corporation’s
objectives and suits its performance.
The Committee’s Charter provided for the
detailed powers of the Committee and how
to be constituted and formed, the terms
of convention of its meetings, the required
quorum for convention of its meetings and
how to make its decision.
competitive nature of the Corporate Strategy
and the fair compensations commensurate
with the same to attract and retain talented
employees for achievement of best results.
Nominations
and
Remunerations
Committee comprises four (4) nonexecutive independent members from the
Board of Directors.
Investment and Finance Committee:
In addition to the Audit Committee and the
Nominations and Remunerations Committee
provided for in the Ministerial Resolution
No.518 of 2009 Concerning Governance
Rules and Corporate Discipline Standards, the
Board of Directors of Etisalat constituted the
Investment and Finance Committee to assist
the Board to carry out its functions related
to the Corporation’s internal and external
investments. The Charter of the Committee
defined the functions and duties assigned to
the Committee and specified the cases where
the Committee is entitled to make decisions
as it deems appropriate. On the other hand, it
defined the cases where the Committee’s role
is exclusive to issuance of recommendations
for the Board to pass appropriate resolutions
thereon. The Committee’s Charter is deemed
an authorization by the Board for the
Committee to carry out the functions and
responsibilities stipulated therein.
Operating Structure of the
Corporation
During 2014, Etisalat Group continued to
implement its revised group structure, which
was commenced in 2009. The purpose was to
manage its international expansion strategy,
protect value resulting from the Corporation’s
United Arab Emirates operations, secure
value creation from its nineteen international
operations, and to gain the trust of its
stakeholders by putting in place a solid
structure based on corporate punctuality and
governance in line with best practices.
At the level of the United Arab Emirates,
the Group organization structure features
two autonomous Operating Units: Etisalat
UAE Unit (which is entrusted with providing
Licensed Telecom Services in the United Arab
Emirates); and the Etisalat Services Unit (a
wholly owned holding company entrusted
with providing certain non-core, nontelecom services to the Corporation as well
as third parties).
The Group exercises and sets its various
activities and responsibilities and sets its
key corporate policies, prepares plans, and
monitors the operational and financial
performance of its operating companies, and
reports the same to the Board of Directors on
a regular basis.
The Investment and Finance Committee
comprises five (5) independent non-executive
members from the Board of Directors.
In the course of exercising its functions,
the Committee takes into consideration the
Etisalat
59
Financials
Independent Auditor’s Report to the Shareholders
Report on the Consolidated
Financial Statements
We have audited the accompanying
consolidated financial statements of
Emirates Telecommunications Corporation
(“the Corporation”) and its subsidiaries
(together “the Group”) which comprise
the consolidated statement of financial
position as at 31 December 2014 and the
consolidated statement of profit or loss,
consolidated statement of comprehensive
income, consolidated statement of changes
in equity and consolidated statement of
cash flows for the year then ended, and a
summary of significant accounting policies
and other explanatory information.
Management’s Responsibility
for the Consolidated Financial
Statements
Management is responsible for the
preparation and fair presentation of
these consolidated financial statements
in accordance with International Financial
Reporting Standards, and for such internal
control as management determines is
necessary to enable the preparation of
consolidated financial statements that are
free from material misstatement, whether
due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion
on these consolidated financial statements
based on our audit. We conducted our audit
in accordance with International Standards
on Auditing. Those standards require that
60
Annual Report 2014
we comply with ethical requirements
and plan and perform the audit to
obtain reasonable assurance whether the
consolidated financial statements are free
from material misstatement.
position of the Group as at 31 December
2014, and its financial performance and
its cash flows for the year then ended in
accordance with International Financial
Reporting Standards.
An audit involves performing procedures to
obtain audit evidence about the amounts
and disclosures in the consolidated
financial statements. The procedures
selected depend on the auditors’ judgment,
including the assessment of the risks of
material misstatement of the consolidated
financial statements, whether due to fraud
or error. In making those risk assessments,
the auditors consider internal control
relevant to the entity’s preparation and
fair presentation of the consolidated
financial statements in order to design
audit procedures that are appropriate
in the circumstances, but not for the
purpose of expressing an opinion on
the effectiveness of the entity’s internal
control. An audit also includes evaluating
the appropriateness of accounting policies
used and the reasonableness of accounting
estimates made by management, as well as
evaluating the overall presentation of the
consolidated financial statements.
Report on Other Legal and
Regulatory Requirements
We have obtained all the information and
explanations considered necessary for the
purposes of our audit. The Corporation
has maintained proper books of account
and has carried out physical verification
of inventories in accordance with properly
established procedures and the financial
information included in the Chairman’s
statement is consistent with the books of
account of the Corporation. Nothing has
come to our attention which causes us to
believe that the Corporation has breached
any of the applicable provisions of the UAE
Federal Act No. (1) of 1991, as amended
by Decretal Federal Code No. 3 of 2003,
or of its Articles of Association, which
would materially affect its activities or its
financial position as at 31 December 2014.
We believe that the audit evidence we
have obtained is sufficient and appropriate
to provide a basis for our audit opinion.
Opinion
In our opinion, the accompanying
consolidated financial statements present
fairly, in all material respects, the financial
Deloitte & Touche (M.E.)
Abu Dhabi, United Arab Emirates
Mutasem M. Dajani
Registration No. 726
25 February 2015
Etisalat
61
Financials
Emirates Telecommunications Corporation
Emirates Telecommunications Corporation
Consolidated statement of profit or loss for the year ended 31 December 2014
Consolidated statement of comprehensive income for the year ended 31 December 2014
Notes
2014
AED’000
2013
AED’000
Continuing operations
Profit for the year
Revenue
48,766,875
38,564,181
Operating expenses
5
(31,832,583)
(24,397,205)
Impairment and other losses
9
(931,963)
(1,374,176)
Share of results of associates and joint ventures
13
(461,065)
1,754,341
15,541,264
14,547,141
(5,333,084)
(6,115,016)
10,208,180
8,432,125
Operating profit before federal royalty
Federal royalty
5
Operating profit
Finance and other income
6
2,653,494
468,558
Finance and other costs
7
(1,736,511)
(437,572)
11,125,163
8,463,111
(1,153,576)
(648,647)
9,971,587
7,814,464
(118,108)
(63,516)
9,853,479
7,750,948
Profit before tax
Taxation
8
Profit for the year from continuing operations
Loss from discontinued operations
36
Profit for the year
Profit attributable to:
Non-controlling interests
8,892,019
7,078,388
961,460
672,560
9,853,479
7,750,948
AED 1.12
AED 0.90
Earnings per share
2013
AED’000
9,853,479
7,750,948
(141,593)
(126,618)
(2,376,730)
(1,969,056)
1,301,869
-
(27,969)
(138,909)
-
264,310
(284,991)
-
(1,529,414)
(1,970,273)
8,324,065
5,780,675
7,426,551
6,063,592
897,514
(282,917)
8,324,065
5,780,675
Items that will not be reclassified subsequently to profit or loss:
Remeasurement of defined benefit obligations - net of tax
Items that may be reclassified subsequently to profit or loss:
Exchange differences arising during the year
Exchange differences on translation of foreign operations
Gain on hedging instruments designated in hedges of the net assets of foreign
operations
22
Available-for-sale financial assets
Loss on revaluation of financial assets during the year
Reclassification adjustment relating to available-for-sale financial assets impaired
during the year
Reclassification adjustment relating to available-for-sale financial assets on
disposal
Total comprehensive income for the year
29
Attributable to:
The equity holders of the Corporation
35
2014
AED’000
Other comprehensive income / (loss)
Total other comprehensive loss
The equity holders of the Corporation
Basic and diluted
Notes
Non-controlling interests
______________________________________________
Chairman
The accompanying notes on pages 67 to 115 form an integral part of these consolidated financial statements.
The Independent Auditor’s report is set out on page 1.
62
Annual Report 2014
Board Member
The accompanying notes on pages 67 to 115 form an integral part of these consolidated financial statements.
The Independent Auditor’s report is set out on page 1.
Etisalat
63
Financials
Emirates Telecommunications Corporation
Emirates Telecommunications Corporation
Consolidated statement of financial position as at 31 December 2014
Consolidated statement of changes in equity for the year ended 31 December 2014
Notes
Non-current assets
Goodwill
Other intangible assets
Property, plant and equipment
Investment property
Investments in associates and joint ventures
Other investments
Other receivables
Derivative financial instruments
Loans to related party
Deferred tax assets
9
9
10
11
14
15
18
22
16
8
2014
AED’000
2013
AED’000
15,690,382
19,094,776
45,972,612
41,378
5,822,453
983,997
803,828
293,584
2,390,194
317,383
91,410,587
5,552,266
9,447,281
31,319,161
41,211
7,062,009
866,984
595,981
2,390,194
243,042
57,518,129
Current assets
Inventories
Trade and other receivables
Current income tax assets
Due from associates and joint ventures
Other investments held for sale
Cash and cash equivalents
17
18
8
16
15
19
624,652
17,376,549
637,299
459,855
18,542,859
37,641,214
498,232
10,613,248
503,396
683,833
448,448
15,450,248
28,197,405
Assets classified as held for sale
36
532,757
-
129,584,558
85,715,534
1,075,480
18,619,459
936,699
4,740,292
17,283
126,736
2,044,540
27,560,489
828,565
4,467,122
68,751
1,749,839
2,460
201,089
1,911,773
9,229,599
Total assets
Non-current liabilities
Other payables
Borrowings
Payables related to investments and licenses
Deferred tax liabilities
Finance lease obligations
Provisions
Provision for end of service benefits
20
21
23
8
24
25
27
Current liabilities
Trade and other payables
Borrowings
Payables related to investments and licenses
Current income tax liabilities
Finance lease obligations
Provisions
20
21
23
8
24
25
30,988,248
3,609,711
3,133,794
369,379
6,983
1,862,566
39,970,681
21,164,411
1,404,543
2,963,623
185,812
2,564
1,172,286
26,893,239
Liabilities directly associated with the assets classified as held for sale
36
1,126,517
-
68,657,687
60,926,871
36,122,838
49,592,696
7,906,140
26,852,704
7,517,339
42,276,183
18,650,688
60,926,871
7,906,140
28,266,980
4,359,024
40,532,144
9,060,552
49,592,696
Total liabilities
Net assets
Equity
Share capital
Reserves
Retained earnings
Equity attributable to the equity holders of the Corporation
Non-controlling interests
Total equity
______________________
Chairman
The accompanying notes on pages 67 to 115 form an integral part of these consolidated financial statements.
The Independent Auditor’s report is set out on page 1.
64
Annual Report 2014
28
29
12
Attributable to equity holders of the Corporation
Reserves
Retained
earnings
Owners’
equity
Noncontrolling
interests
Total
equity
AED’000
AED’000
AED’000
AED’000
AED’000
AED’000
7,906,140
29,115,839
3,492,333
40,514,312
9,398,260
49,912,572
-
(985,167)
7,048,759
6,063,592
(282,917)
5,780,675
29
-
136,308
(136,308)
-
-
-
Disposal of partial interest in a
subsidiary
12
-
-
284,220
284,220
87,233
371,453
Acquisition of non-controlling
interests
12
-
-
(7,804)
(7,804)
(5,782)
(13,586)
Additional equity from noncontrolling interests
12
-
-
-
-
16,835
16,835
Dividends
34
-
-
(6,322,176)
(6,322,176)
(153,077)
(6,475,253)
Balance at 31 December 2013
7,906,140
28,266,980
4,359,024
40,532,144
9,060,552
49,592,696
Balance at 1 January 2014
7,906,140
28,266,980
4,359,024
40,532,144
9,060,552
49,592,696
Total comprehensive income for
the year
-
(1,432,516)
8,859,068
7,426,552
897,514
8,324,066
Other movements in equity
-
-
325
325
362
687
Notes
Balance at 1 January 2013
Total comprehensive income for
the year
Transfer to reserves
Share
capital
Transaction with owners:
Transfer to reserves
29
-
18,240
(18,240)
-
-
-
Acquisition of a subsidiary
30
-
-
-
-
8,159,944
8,159,944
Acquisition of non-controlling
interests
12
-
-
(150,933)
(150,933)
132,563
(18,370)
Equity contribution from
non-controlling interests for
acquisition of a subsidiary
12
-
-
-
-
1,791,831
1,791,831
Dividends
34
-
-
(5,531,905)
(5,531,905)
(1,392,078)
(6,923,983)
7,906,140
26,852,704
7,517,339
42,276,183
18,650,688
60,926,871
Transaction with owners:
Balance at 31 December 2014
_______________________
Board Member
The accompanying notes on pages 67 to 115 form an integral part of these consolidated financial statements.
The Independent Auditor’s report is set out on page 1.
Etisalat
65
Financials
Emirates Telecommunications Corporation
Emirates Telecommunications Corporation
Consolidated statement of cash flows for the year ended 31 December 2014
Notes to the consolidated financial statements for year ended 31 December 2014
2014
AED’000
2013
AED’000
10,099,333
8,418,003
5,163,502
1,694,716
931,963
461,065
965,915
(21,694)
3,798,455
809,093
1,374,176
(1,754,341)
300,806
-
Operating profit before changes in working capital
Changes in working capital:
Inventories
Due from associates and joint ventures
Trade and other receivables
Trade and other payables
19,294,800
12,946,192
51,816
223,979
(2,560,724)
3,171,317
(75,475)
(175,392)
210,436
995,923
Cash generated from operations
Income taxes paid
Payment of end of service benefits
20,181,188
(2,266,300)
(706,363)
13,901,684
(490,317)
(437,806)
17,208,525
12,973,561
486,928
(6,874,794)
239,141
(2,038,764)
25
797,559
(18,660,985)
(18,370)
1,966,853
(71,038)
40,000
(5,567,248)
73,586
(766,638)
1,010,169
427,682
(24,102,407)
(4,853,487)
Notes
Operating profit
Adjustments for:
Depreciation
Amortisation
Impairment and other losses
Share of results of associates and joint ventures
Provisions and allowances
Other non-cash movements
10, 11
9
9,10
13
27
Net cash generated from operating activities
Cash flows from investing activities
Net proceeds from disposal / (acquisition) of other investments
Proceeds from capital reduction of a joint venture
Purchase of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Purchase of other intangible assets
Proceeds from disposal of other intangible assets
Dividend income received from associates and other investments
Acquisition of Maroc Telecom, net of cash acquired
Acquisition of additional equity in subsidiary
Finance and other income received
14
30
Net cash used in investing activities
Cash flows from financing activities
Proceeds from borrowings and finance lease obligations
Repayments of borrowings and finance lease obligations
Equity contribution from non-controlling interests for acquisition of a subsidiary
Dividends paid
Finance and other costs paid
Net cash generated from/ (used) in financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Effect of foreign exchange rate changes
Cash and cash equivalents at the end of the year
19
34,636,255
(18,608,720)
1,813,528
(6,923,983)
(1,755,522)
3,491,716
(3,142,979)
(6,475,253)
(458,607)
9,161,558
(6,585,123)
2,267,676
15,450,248
833,849
18,551,773
1,534,951
13,934,076
(18,779)
1. General information
The
Emirates
Telecommunications
Corporation
Group
(“the
Group”)
comprises the holding company Emirates
Telecommunications Corporation (“the
Corporation”) and its subsidiaries. The
Corporation was incorporated in the United
Arab Emirates (“UAE”), with limited liability;
in 1976 by UAE Federal Government decree
No. 78, which was revised by the UAE
Federal Act No. (1) of 1991 and further
amended by Decretal Federal Code No. 3
of 2003 concerning the regulation of the
telecommunications sector in the UAE. In
accordance with Federal Law No. 267/10
for 2009, the Federal Government of the
UAE transferred its 60% holding in the
Corporation to the Emirates Investment
Authority with effect from 1 January
2008, which is ultimately controlled by
the UAE Federal Government. The address
of the registered office is P.O. Box 3838,
Abu Dhabi, United Arab Emirates. The
Corporation’s shares are listed on the Abu
Dhabi Securities Exchange.
The principal activities of the Group are
to provide telecommunications services,
media and related equipment including
the provision of related contracting and
consultancy services to international
telecommunications
companies
and
consortia. These activities are carried
out through the Corporation (which
holds a full service license from the UAE
Telecommunications Regulatory Authority
valid until 2025), its subsidiaries, associates
and joint ventures.
These consolidated financial statements
were approved by the Board of Directors
and authorised for issue on 25 February
2015.
2. Significant accounting policies
The significant accounting policies adopted
in the preparation of these consolidated
financial statements are set out below.
regardless of whether the price is directly
observable or estimated using another
valuation technique.
Basis of preparation
The consolidated financial statements
are presented in UAE Dirhams (AED)
which is the Corporation’s functional and
presentational currency, rounded to the
nearest thousand except where otherwise
indicated.
The consolidated financial statements
of the Group have been prepared in
accordance with International Financial
Reporting Standards (“IFRS”) applicable
to companies reporting under IFRS. The
preparation of financial statements in
conformity with IFRS requires the use of
certain critical accounting estimates. It
also requires management to exercise its
judgement in the process of applying the
Group’s accounting policies. The areas
involving a higher degree of judgement or
complexity, or areas where assumptions and
estimates are significant to the consolidated
financial statements are disclosed in note
3. The consolidated financial statements
are prepared under the historical cost
convention except for the revaluation
of certain financial instruments and in
accordance with the accounting policies
set out herein.
Historical cost is generally based on the
fair value of the consideration given in
exchange for goods and services. Fair value
is the price that would be received to sell
an asset or paid to transfer a liability in
an orderly transaction between market
participants at the measurement date,
Acquisition of Maroc Telecom
On 14 May 2014, the Group acquired
53% stake in Maroc Telecom at a net
adjusted price of EUR 4.1 billion (AED 20.9
billion). This amount included the cash
value of the 2012 dividend amounting to
EUR 0.3 billion (AED 1.5 billion). Maroc
Telecom is accordingly consolidated in this
consolidated financial information from
the date of acquisition, as aforesaid.
The acquisition is effected by the Group
through an entity specifically created
to acquire and hold the shares of Maroc
Telecom. Abu Dhabi Fund for Development
acquired 8.7 per cent. of the shareholding
of this entity. Information about the
acquisition is detailed in note 30.
New and amended standards
adopted
statements. The application of these revised
IFRSs has not had any material impact on
the amounts reported for the current and
prior periods but may affect the accounting
for future transactions or arrangements.
• Amendments to IAS 32 Financial
Instruments: Presentation relating to
offsetting financial assets and liabilities
• Amendments to IFRS 10 Consolidated
Financial Statements
• IFRS 12 Disclosure of Interests in Other
Entities
• IAS 27 Separate Financial Statements
relating to investment entities and
exemption of consolidation of particular
subsidiaries
• Amendments to IAS 36 Impairment of
Assets relating to recoverable amount
disclosures for non-financial assets
• Amendments to IAS 39 Financial
instruments relating to recognition and
Measurement amendments for novations
of derivatives and continuation of hedge
accounting
• IFRIC 21 Levies relating to guidance on
when to recognize a levy imposed by a
government
The following revised IFRSs have been
adopted in these consolidated financial
15,450,248
The accompanying notes on pages 67 to 115 form an integral part of these consolidated financial statements.
The Independent Auditor’s report is set out on page 1.
66
Annual Report 2014
Etisalat
67
Financials
Emirates Telecommunications Corporation
Emirates Telecommunications Corporation
Notes to the consolidated financial statements for year ended 31 December 2014
Notes to the consolidated financial statements for year ended 31 December 2014
2. Significant accounting policies (continued)
2. Significant accounting policies (continued)
New and amended standards in issue but not yet effective
At the date of the consolidated financial statements, the following Standards, Amendments and Interpretations have not been effective
but have not been early adopted:
Effective date
IFRS 9 Financial Instruments (as amended in 2010)
1 January 2018
consolidation from the date that control
ceases. Specifically, income and expenses
of a subsidiary acquired or disposed
of during the year are included in the
consolidated statement of profit or loss
and other comprehensive income from the
date the Company gains control until the
date when the Company ceases to control
the subsidiary.
Amendment to IFRS 7 Financial Instruments: Disclosures relating to transition to IFRS 9 (or otherwise
when IFRS 9 is first applied)
When IFRS 9 is first applied
IFRS 14 Regulatory deferral accounts
1 January 2016
Amendments to IAS 39 Financial instruments – Continuation of hedge accounting
When IFRS 9 is first applied
Amendments to IFRS 11 - Accounting for acquisitions of Interests in Joint operations
1 January 2016
Amendments to IAS 16 and IAS 38 - Clarification of acceptable methods of depreciation and
amortisation
1 January 2016
Amendments to IAS 16 and IAS 41 - Agriculture: Bearer plants
1 January 2016
IFRS 15 – Revenue from contracts with customers
1 January 2017
Where necessary, adjustments are made to
the financial statements of subsidiaries to
bring the accounting policies used in line
with those used by the Group.
Amendment to IAS 27 Separate Financial Statements (as amended in 2011) relating to reinstating the
equity method as an accounting option for investments in in subsidiaries, joint ventures and associates
in an entity’s separate financial statements
1 July 2016
Business combinations
Amendments resulting from September 2014 Annual Improvements to IFRS 5 Non-current Assets
Held for Sale and Discontinued Operations, IFRS 7 Financial Instruments: Disclosures, IAS 19 Employee
Benefits and IAS 34 Interim Financial Reporting
1 July 2016
Amendments to IFRS 10 and IAS 28 clarify that the recognition of the gain or loss on the sale or
contribution of assets between an investor and its associate or joint venture depends on whether the
assets sold or contributed constitute a business
1 January 2016
Annual Improvements 2010-2012 Cycle, IFRS 2, IFRS 3, IFRS 8, IFRS 13, IAS 16 and 38 and IAS 24
1 July 2014
Amendments to IAS 19 Defined Benefit Plans relating to employee contributions
1 July 2014
Annual Improvements 2011-2013 Cycle, IFRS 1, IFRS 3, IFRS 13 and IAS 40
1 July 2014
Management
anticipates
that
the
application of the above Standards and
Interpretations in future periods will have
no material impact on the consolidated
financial statements of the Group in
the period of initial application with
the exception of IFRS 15 revenue from
contracts with customers and IFRS 9
financial Instruments which management
is currently assessing. However, it is
not practicable to provide a reasonable
estimate of effects of the application of
these standards until the Group performs
a detailed review.
Basis of consolidation
These consolidated financial statements
68
Annual Report 2014
incorporate the financial statements of the
Corporation and entities controlled by the
Corporation. Control is achieved when the
Group has:
• has power over the investee;
• is exposed , or has rights, to variable
returns from its involvement;
• has the ability to use its power to
affect its returns.
The existence and effect of potential voting
rights that are currently exercisable or
convertible are considered when assessing
whether the Group has the power to
control another entity.
Non-controlling interests in the net assets
of consolidated subsidiaries are identified
separately from the Group’s equity therein.
Non-controlling interests consist of the
amount of those interests at the date of
the original business combination and the
non-controlling interests share of changes
in equity since the date of the business
combination. Total comprehensive income
within subsidiaries is attributed to the
Group and to the non-controlling interest
even if this results in non-controlling
interests having a deficit balance.
Intercompany
transactions,
balances
and any unrealised gains/losses between
Group entities have been eliminated in the
consolidated financial statements.
The acquisition of subsidiaries is accounted
for using the acquisition method. The
cost of an acquisition is measured as the
aggregate of the fair value, at the date
of exchange, of the assets given, equity
instruments issued and liabilities incurred
or assumed. The acquiree’s identifiable
assets and liabilities that meet the
conditions for recognition under IFRS 3
Business Combinations are recognised at
their fair values at the acquisition date.
Acquisition-related costs are recognised in
the consolidated statement of profit or loss
as incurred.
Goodwill arising on acquisition is recognised
as an asset and initially measured at cost,
being the excess of the cost of the business
combination over the Group’s interest
in the net fair value of the identifiable
assets, liabilities and contingent liabilities
recognised. If, after reassessment, the
Group’s interest in the acquisition-date
net fair value of the acquiree’s identifiable
assets and liabilities exceeds the cost of
the business combination, the excess is
recognised immediately in the consolidated
statement of profit or loss.
The non-controlling interest in the acquire
is initially measured at the minority’s
proportion of the net fair value of the
assets, liabilities and contingent liabilities
recognised.
Step acquisition
If the business combination is achieved in
stages, the acquisition date carrying value
of the acquirer’s previously held equity
interest in the acquire is re-measured to
fair value at the acquisition date; any gains
or losses arising from such re-measurement
are recognised in the consolidated
statement of profit or loss. Amounts arising
from interests in the acquire prior to the
acquisition date that have previously been
recognised in other comprehensive income
are reclassified to profit or loss where such
treatment would be appropriate if that
interest were disposed of.
Associates and joint ventures
A joint venture is a joint arrangement
whereby the Group has joint control of the
arrangement and has corresponding rights
to the net assets of the arrangement. Joint
control is the contractually agreed sharing
of control of an arrangement, which exists
only when decisions about the relevant
activities require unanimous consent of
the parties sharing control. Associates
are those companies over which Group
exercises significant influence but it does
not control or have joint control over those
companies. Investments in associates and
joint ventures are accounted for using the
equity method of accounting except when
the investment, or a portion thereof, is
classified as held for sale, in which case it
is accounted for in accordance with IFRS 5.
Investments in associates and joint ventures
are carried in the consolidated statement
of financial position at cost as adjusted by
post-acquisition changes in the Group’s
share of the net assets of the associates
and joint ventures less any impairment
in the value of individual investments.
Losses of the associates and joint ventures
in excess of the Group’s interest are not
recognised unless the Group has incurred
legal or constructive obligations.
The carrying values of investments in
associates and joint ventures are reviewed
on a regular basis and if impairment in the
value has occurred, it is written off in the
period in which those circumstances are
identified.
Any excess of the cost of acquisition over
the Group’s share of the fair values of the
identifiable net assets of the associates at
the date of acquisition is recognised as
goodwill and included as part of the cost
of investment. Any deficiency of the cost
of acquisition below the Group’s share of
the fair values of the identifiable net assets
of the associates at the date of acquisition
is credited to the consolidated statement
of profit or loss in the year of acquisition.
The Group’s share of associates’ and joint
ventures’ results is based on the most
recent financial statements or interim
financial statements drawn up to the
Group’s reporting date. Accounting policies
of associates and joint ventures have been
adjusted, where necessary, to ensure
consistency with the policies adopted by
the Group.
Profits and losses resulting from upstream
and downstream transactions between
the Groups (including its consolidated
subsidiaries) and its associate or joint
ventures are recognised in the Group’s
financial statements only to the extent
of unrelated group’s interests in the
associates or joint ventures. Losses may
provide evidence of an impairment of the
asset transferred, in which case appropriate
provision is made for impairment.
Dilution gains and losses arising on deemed
disposal of investments in associates
and joint ventures are recognised in the
consolidated statement of profit or loss.
Subsidiaries are consolidated from the date
on which effective control is transferred
to the Group and are excluded from
Etisalat
69
Financials
Emirates Telecommunications Corporation
Emirates Telecommunications Corporation
Notes to the consolidated financial statements for year ended 31 December 2014
Notes to the consolidated financial statements for year ended 31 December 2014
2. Significant accounting policies (continued)
2. Significant accounting policies (continued)
Revenue
Revenue is measured at the fair value of
the consideration received or receivable
and represents amounts receivable for
telecommunication products and services
provided in the normal course of business.
Revenue is recognised, net of sales taxes,
discounts and rebates, when it is probable
that the economic benefits associated with
a transaction will flow to the Group and
the amount of revenue and associated cost
can be measured reliably. Revenue from
telecommunication services comprises
amounts charged to customers in respect
of monthly access charges, airtime usage,
messaging, the provision of other mobile
telecommunications services, including
data services and information provision
and fees for connecting users of other
fixed line and mobile networks to the
Group’s network.
Access charges and airtime used by
contract customers are invoiced and
recorded as part of a periodic billing cycle
and recognised as revenue over the related
access period, with unbilled revenue
resulting from services already provided
from the billing cycle date to the end of
each period accrued and unearned revenue
from services provided in periods after each
accounting period deferred. Revenue from
the sale of prepaid credit is recognised on
the actual utilisation of the prepaid credit
and is deferred as deferred income until
such time as the customer uses the airtime,
or the credit expires.
Revenue from data services and information
provision is recognised when the Group
has performed the related service and,
depending on the nature of the service,
is recognised either at the gross amount
billed to the customer or the amount
receivable by the Group as commission for
facilitating the service.
Incentives are provided to customers in
various forms and are usually offered
on signing a new contract or as part
of a promotional offering. Where such
incentives are provided on connection of a
new customer or the upgrade of an existing
customer, revenue representing the fair
value of the incentive, relative to other
deliverables provided to the customer as
part of the same arrangement, is deferred
70
Annual Report 2014
and recognised in line with the Group’s
performance of its obligations relating to
the incentive.
In revenue arrangements including more
than one deliverable that have value
to a customer on standalone basis, the
arrangement consideration is allocated
to each deliverable based on the relative
fair value of the individual elements. The
Group generally determines the fair value
of individual elements based on prices at
which the deliverable is regularly sold on a
standalone basis.
Contract revenue is recognised under the
percentage of completion method. Profit
on contracts is recognised only when the
outcome of the contracts can be reliably
estimated. Provision is made for foreseeable
losses estimated to complete contracts.
Revenue from interconnection of voice and
data traffic with other telecommunications
operators is recognised at the time the
services are performed based on the actual
recorded traffic.
Interest income is accrued on a time basis,
by reference to the principal outstanding
and at the effective interest rate applicable,
which is the rate that exactly discounts
estimated future cash receipts through the
expected life of the financial assets to that
asset’s net carrying amount.
Leasing
Leases are classified as finance leases
whenever the terms of the lease transfer
substantially all the risks and rewards of
ownership to the lessee. All other leases are
classified as operating leases.
i) The Group as lessor
Amounts due from lessees under finance
leases are recorded as receivables at the
amount of the Group’s net investment
in the leases. Finance lease income is
allocated to accounting periods so as to
reflect a constant periodic rate of return
on the Group’s net investment outstanding
in respect of the leases.
Revenues from the sale of transmission
capacity on terrestrial and submarine
cables are recognised on a straight-line
basis over the life of the contract. Rental
income from operating leases is recognised
on a straight-line basis over the term of the
relevant lease. Initial direct costs incurred
in negotiating and arranging an operating
lease are added to the carrying amount
of the leased asset and recognised on a
straight-line basis over the lease term.
Foreign currencies
reporting period. Goodwill and fair value
adjustments arising on the acquisition
of a foreign entity are also translated at
exchange rates prevailing at the end of each
reporting period. Income and expense items
are translated at the average exchange
rates for the period unless exchange rates
fluctuate significantly during that period,
in which case the exchange rates at the
date of transactions are used. Exchange
differences are recognised in other
comprehensive income and are presented
in the translation reserve in equity. On
disposal of overseas subsidiaries or when
significant influence is lost, the cumulative
translation differences are recognised as
income or expense in the period in which
they are disposed of.
i) Functional currencies
iii) Foreign exchange differences
The individual financial statements of
each of the Group’s subsidiaries, associates
and joint ventures are presented in
the currency of the primary economic
environment in which they operate (its
functional currency). For the purpose of
the consolidated financial statements, the
results, financial position and cash flows of
each Group company are expressed in UAE
Dirhams, which is the functional currency
of the Corporation, and the presentation
currency of the consolidated financial
statements.
Exchange differences are recognised in the
consolidated statement of profit or loss in
the period in which they arise except for
exchange differences that relate to assets
under construction for future productive
use. These are included in the cost of
those assets when they are regarded as
an adjustment to interest costs on foreign
currency borrowings. Exchange differences
on transactions entered into to hedge
certain foreign currency risks; and exchange
differences on monetary items receivable
from or payable to a foreign operation
for which settlement is neither planned
nor likely to occur, which form part of the
net investment in a foreign operation are
recognised initially in other comprehensive
income and reclassified from equity to the
consolidated statement of profit or loss on
disposal of net investment.
ii) The Group as lessee
Rentals payable under operating leases are
charged to the consolidated statement of
profit or loss on a straight-line basis over
the term of the relevant lease. Benefits
received and receivable as an incentive
to enter into an operating lease are also
spread on a straight-line basis over the
lease term.
In preparing the financial statements of
the individual companies, transactions in
currencies other than the entity’s functional
currency are recorded at exchange rates
prevailing at the dates of the transactions.
At end of reporting period, monetary items
that are denominated in foreign currencies
are retranslated into the entity’s functional
currency at rates prevailing at that date.
Non-monetary items carried at fair value
that are denominated in foreign currencies
are translated at the rates prevailing at the
date when the fair value was determined.
Non-monetary items that are measured
in terms of historical cost in a foreign
currency are not retranslated.
ii) Consolidation
On consolidation, the assets and liabilities
of the Group’s foreign operations are
translated into UAE Dirhams at exchange
rates prevailing on the date of end of each
Borrowing costs
Borrowing costs directly attributable to
the acquisition, construction or production
of qualifying assets, which are assets that
necessarily take a substantial period of time
to get ready for their intended use or sale,
are added to the cost of those assets, until
such time as the assets are substantially
ready for their intended use or sale.
Investment income earned on the temporary
investment of specific borrowings pending
their expenditure on qualifying assets is
deducted from the borrowing costs eligible
for capitalisation.
All other borrowing costs are recognised in
the consolidated statement of profit or loss
in the period in which they are incurred.
Government grants
Government grants relating to nonmonetary assets are recognised at nominal
value.
Grants that compensate the
Group for expenses are recognised in the
consolidated statement of profit or loss on
a systematic basis in the same period in
which the expenses are recognised. Grants
that compensate the Group for the cost of
an asset are recognised in the consolidated
statement of profit or loss on a systematic
basis over the expected useful life of the
related asset upon capitalisation.
End of service benefits
Payments to defined contribution schemes
are charged as an expense as they fall due.
Payments made to state-managed pension
schemes are dealt with as payments to
defined contribution schemes where the
Group’s obligations under the schemes are
equivalent to those arising in a defined
contribution scheme.
Provision for employees’ end of service
benefits for non-UAE nationals is made in
accordance with the Projected Unit Cost
method as per IAS 19 Employee Benefits
taking into consideration the UAE Labour
Laws. The provision is recognised based on
the present value of the defined benefit
obligations.
The present value of the defined benefit
obligations is calculated using assumptions
on the average annual rate of increase in
salaries, average period of employment
of non-UAE nationals and an appropriate
discount rate. The assumptions used are
calculated on a consistent basis for each
period and reflect management’s best
estimate. The discount rates are set in
line with the best available estimate of
market yields currently available at the
reporting date with reference to high
quality corporate bonds or other basis, if
applicable.
Taxation
The tax expense represents the sum of the
tax currently payable and deferred tax.
The tax currently payable is based on
taxable profit for the year. Taxable profit
differs from profit as reported in the
consolidated statement of profit or loss
because it excludes items of income or
expense that are taxable or deductible
in other periods and it further excludes
items that are never taxable or deductible.
The Group’s liability for current tax is
calculated using tax rates that have been
enacted or substantively enacted by end of
the reporting period.
Deferred tax is the tax expected to be
payable or recoverable on differences
between the carrying amounts of assets
and liabilities in the financial statements
and the corresponding tax bases used in
the computation of taxable profit, and is
accounted for using the liability method.
Deferred tax is calculated using relevant
tax rates and laws that have been enacted
or substantially enacted by the reporting
date and are expected to apply when the
related deferred tax asset is realised or the
deferred tax liability is settled.
Deferred tax is charged or credited in the
consolidated statement of profit or loss,
except when it relates to items charged or
credited directly to equity, in which case
the deferred tax is also dealt with in equity.
Deferred tax liabilities are generally
recognised for all taxable temporary
differences and deferred tax assets are
recognised to the extent that it is probable
that sufficient taxable profits will be
available in the future against which
deductible temporary differences can be
utilised.
The carrying amount of deferred tax assets
is reviewed at the end of the reporting
period and reduced to the extent that it is
no longer probable that sufficient taxable
profits will be available to allow all or
part of the asset to be recovered. Such
assets and liabilities are not recognised if
the temporary difference arises from the
initial recognition of goodwill or from the
initial recognition (other than in a business
combination) of other assets and liabilities
in a transaction that affects neither taxable
profit nor the accounting profit.
Etisalat
71
Financials
Emirates Telecommunications Corporation
Emirates Telecommunications Corporation
Notes to the consolidated financial statements for year ended 31 December 2014
Notes to the consolidated financial statements for year ended 31 December 2014
2. Significant accounting policies (continued)
2. Significant accounting policies (continued)
Taxation (Continued)
Property, plant and equipment
Deferred tax assets and liabilities are offset
when there is a legally enforceable right to
set off current tax assets against current
tax liabilities and when they relate to
income taxes levied by the same taxation
authority and the Group intends to settle
its current tax assets and liabilities on a net
basis.
Property, plant and equipment are only
measured at cost, less accumulated
depreciation and any impairment. Cost
comprises the cost of equipment and
materials, including freight and insurance,
charges from contractors for installation
and building works, direct labour costs,
capitalised borrowing costs and an
estimate of the costs of dismantling and
removing the equipment and restoring the
site on which it is located.
Deferred tax liabilities are recognised for
taxable temporary differences arising on
investments in subsidiaries and associates,
and interests in joint ventures, except
where the Group is able to control the
reversal of the temporary difference and it
is probable that the temporary difference
will not reverse in the foreseeable future.
Assets in the course of construction are
carried at cost, less any impairment.
Cost includes professional fees and,
for qualifying assets, borrowing costs
capitalised in accordance with the Group’s
accounting policy. Depreciation of these
assets commences when the assets are
ready for their intended use.
Subsequent costs are included in the asset’s
carrying amount or recognised as a separate
asset, as appropriate, only when it is probable
that future economic benefits associated
with the item will flow to the Group and the
cost of the item can be measured reliably.
All other repairs and maintenance costs are
charged to consolidated statement of profit
or loss during the period in which they are
incurred.
Other than land (which is not depreciated),
the cost of property, plant and equipment is
depreciated on a straight line basis over the
estimated useful lives of the assets as follows:
The gain or loss arising on the disposal or
retirement of an asset is determined as the
difference between the sales proceeds and
the carrying amount of the asset and is
recognised in the consolidated statement
of profit or loss.
Investment property
Investment property, which is property
held to earn rentals and/or for capital
appreciation, is carried at cost less
accumulated depreciation and impairment
loss.
Investment properties are depreciated on
a straight-line basis over the lesser of 20
years and the period of the lease.
Intangible assets
(i) Goodwill
Buildings:
Permanent – the lesser of 20 – 30 years and the period of the land lease.
Temporary – the lesser of 4 – 10 years and the period of the land lease.
Plant and equipment:
Submarine – fibre optic cables
– coaxial cables
Cable ships
Years
20
10
15
Coaxial and fibre optic cables
15 – 25
Line plant
15 – 25
Exchanges
5 – 10
Switches
15
Radios/towers
10 – 15
Earth stations/VSAT
5 – 10
Multiplex equipment
10
Power plant
5–7
Subscribers’ apparatus
3–5
General plant
2–7
Other assets:
Motor vehicles
5
Computers
5
Furniture and fittings
exercise control, the attributable amount
of goodwill is included in the determination
of the profit or loss on disposal.
(II) Licenses
Acquired telecommunication licenses are
initially recorded at cost or, if part of a
business combination, at fair value. Licenses
are amortised on a straight line basis over
their estimated useful lives from when the
related networks are available for use. The
estimated useful lives range between 10
and 25 years and are determined primarily
by reference to the unexpired license
period, the conditions for license renewal
and whether licenses are dependent on
specific technologies.
(V) Other intangible assets
(III) Internally-generated intangible
assets
The Group reviews the carrying amounts of
its tangible and intangible assets whenever
there is any indication that those assets
have suffered an impairment loss. If any
such indication exists, the recoverable
amount of the asset is estimated in order
to determine the extent of any impairment
loss. Where the asset does not generate
cash flows that are independent from other
assets, the Group estimates the recoverable
amount of the cash-generating unit to
which the asset belongs. An intangible asset
with an indefinite useful life (including
goodwill) is tested for impairment annually.
Goodwill
arising
on
consolidation
represents the excess of the cost of an
acquisition over the fair value of the
Group’s share of net identifiable assets
of the acquired subsidiary at the date of
acquisition. Goodwill is initially recognised
as an asset at cost and is subsequently
measured at cost less any accumulated
impairment losses.
An internally-generated intangible asset
arising from the Group’s IT development
is recognised at cost only if all of the
following conditions are met:
For the purpose of impairment testing,
goodwill is allocated to each of the Group’s
cash-generating units (CGUs) expected
to benefit from the synergies of the
combination. CGUs to which goodwill has
been allocated are tested for impairment
annually, or more frequently when there is
an indication that the unit may be impaired.
If the recoverable amount of the cashgenerating unit is less than the carrying
amount of the unit, the impairment loss
is allocated first to reduce the carrying
amount of any goodwill allocated to the
unit and then to the other non-financial
assets of the unit pro-rata on the basis of
the carrying amount of each asset in the
unit. An impairment loss recognised for
goodwill is not reversed in a subsequent
period.
• the development cost of the asset can
be measured reliably.
On disposal of an associate, joint venture,
or a subsidiary or where Group ceases to
asset’s economic life. They are amortised
on a straight line basis over the shorter of
the expected period of use and the life of
the contract which ranges between 10 to
20 years.
• an asset is created that can be identified
(such as software and new processes);
• it is probable that the asset created will
generate future economic benefits; and
Customer relationships and trade names
are recognised on acquisition at fair values.
They are amortised on a straight line basis
over their estimated useful lives. The useful
lives of customer relationships range from
3-13 years and trade names have a useful
life of 15-25 years.
Impairment of tangible and
intangible assets excluding goodwill
(IV) Indefeasible Rights of Use (“IRU”)
Recoverable amount is the higher of an
asset’s fair value less costs to sell and
value in use. In assessing value in use, the
estimated future cash flows are discounted
to their present value using a pre-tax
discount rate that reflects current market
assessments of the time value of money
and the risks specific to the asset for which
the estimates of future cash flows have not
been adjusted.
IRUs correspond to the right to use a
portion of the capacity of a terrestrial or
submarine transmission cable granted for
a fixed period. IRUs are recognised at cost
as an asset when the Group has the specific
indefeasible right to use an identified
portion of the underlying asset, generally
optical fibres or dedicated wavelength
bandwidth, and the duration of the right
is for the major part of the underlying
If the recoverable amount of an asset (or
cash-generating unit) is estimated to be
less than its carrying amount, the carrying
amount of the asset (or cash-generating
unit) is reduced to its recoverable amount.
An impairment loss is recognised as an
expense immediately, unless the relevant
asset is carried at a revalued amount, in
which case the impairment loss is treated
as a revaluation decrease.
Internally-generated intangible assets are
amortised on a straight-line basis over
their useful lives of 3-10 years. Where no
internally-generated intangible asset can
be recognised, development expenditure is
recognised as an expense in the period in
which it is incurred.
4-6
The assets’ residual values and useful lives are reviewed and adjusted, if appropriate, at the end of the reporting period.
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Etisalat
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Financials
Emirates Telecommunications Corporation
Emirates Telecommunications Corporation
Notes to the consolidated financial statements for year ended 31 December 2014
Notes to the consolidated financial statements for year ended 31 December 2014
2. Significant accounting policies (continued)
2. Significant accounting policies (continued)
Impairment of tangible and
intangible assets excluding
goodwill (continued)
Non-financial assets other than goodwill
that suffered impairment are reviewed
for possible reversal of the impairment at
each reporting date. Where an impairment
loss subsequently reverses, the carrying
amount of the asset (or cash-generating
unit) is increased to the revised estimate
of its recoverable amount, but so that
the increased carrying amount does not
exceed the carrying amount that would
have been determined had no impairment
loss been recognised for the asset (or cashgenerating unit) in prior years. A reversal of
an impairment loss is recognised as income
immediately, unless the relevant asset is
carried at a revalued amount, in which
case the reversal of the impairment loss is
treated as a revaluation increase.
Inventory
Inventory is measured at the lower of cost
and net realisable value. Cost comprises
direct materials and where applicable,
directs labour costs and those overheads
that have been incurred in bringing the
inventories to their present location
and condition. Allowance is made,
where appropriate, for deterioration
and obsolescence. Cost is determined in
accordance with the weighted average cost
method. Net realisable value represents the
estimated selling price less all estimated
costs of completion and costs to be incurred
in marketing, selling and distribution.
Financial instruments
Financial assets and financial liabilities are
recognised in the consolidated statement of
financial position when the Group becomes
a party to the contractual provisions of the
instrument.
i) Fair value
Financial assets and financial liabilities are
initially measured at fair value The fair
values of financial assets and financial
liabilities are determined as follows:
• the fair value of financial assets and
financial liabilities with standard terms
and conditions and traded on active
liquid markets are determined with
reference to quoted market prices; and
74
Annual Report 2014
• the fair value of other financial assets
and financial liabilities are determined
in accordance with generally accepted
pricing models based on discounted
cash flow analysis using prices from
observable current market transactions.
ii) Financial assets
Financial assets are classified into the
following specified categories: ‘held-tomaturity’ investments, ‘available-for-sale’
financial assets and ‘loans and receivables’.
The classification depends on the nature
and purpose of the financial assets
and is determined at the time of initial
recognition.
All financial assets are recognised and
derecognised on trade date where the
purchase or sale of a financial asset is
under a contract whose terms require
delivery of the investment within the
timeframe established by the market
concerned, and are initially measured at
fair value, plus transaction costs, except
for those financial assets classified as at
fair value through profit or loss, which are
initially measured at fair value.
iii) Effective interest method
The effective interest method is a method
of calculating the amortised cost of a
debt instrument and of allocating interest
income over the relevant period. The
effective interest rate is the rate that
exactly discounts estimated future cash
receipts (including all fees on points paid
or received that form an integral part of
the effective interest rate, transaction costs
and other premiums or discounts) through
the expected life of the debt instrument,
or, where appropriate, a shorter period.
Income is recognised on an effective
interest rate basis for debt instruments
that are held-to-maturity, are availablefor-sale, or are loans and receivables
iv) Held-to-maturity investments
Bonds and Sukuk bonds with fixed or
determinable payments and fixed maturity
dates that the Group has the positive
intent and ability to hold to maturity are
classified as held-to-maturity investments.
Held-to-maturity investments are recorded
at amortised cost using the effective
interest method less any impairment, with
revenue recognised on an effective yield
basis. The Group considers the credit risk of
counterparties in its assessment of whether
such financial instruments are impaired.
v) Available-for-sale financial assets
(“AFS”)
Listed securities held by the Group that are
quoted in an active market are classified
as being AFS and are stated at fair value
at the end of each reporting period. Gains
and losses arising from changes in fair
value are recognised directly in equity
in the investment revaluation reserve
with the exception of impairment losses,
interest calculated using the effective
interest method and foreign exchange
gains and losses on monetary assets, which
are recognised directly in profit or loss.
Where the investment is disposed of or is
determined to be impaired, the cumulative
gain or loss previously recognised in the
investments revaluation reserve is included
in the consolidated statement of profit or
loss.
Dividends on AFS equity instruments are
recognised in the consolidated statement
of profit or loss when the Group’s right to
receive the dividends is established.
The fair value of AFS monetary assets
denominated in a foreign currency is
determined in that foreign currency and
translated at the exchange rate prevailing
at the end of each reporting period. The
foreign exchange gains/losses that are
recognised in the consolidated statement
of profit or loss are determined based on
the amortised cost of the monetary asset.
Other foreign exchange gains/losses are
recognised in other comprehensive income.
The Group assesses at the end of each
reporting period. whether there is objective
evidence that AFS assets are impaired. In
the case of equity securities, a significant
or prolonged decline in the fair value of
the security below its cost is considered
as an indicator that the securities are
impaired. Impairment losses recognised in
the consolidated statement of profit or
loss on equity instruments are not reversed
through the consolidated statement of
profit or loss.
Financial instruments (continued)
AFS equity investments that do not have
a quoted market price in an active market
and whose fair value cannot be reliably
measured are measured at cost less any
identified impairment losses at the end of
each reporting period.
vi) Loans and receivables
Trade receivables, loans and other
receivables that have fixed or determinable
payments that are not quoted in an
active market are classified as ‘loans
and receivables’. Loans and receivables
are recognised initially at fair value and
subsequently measured at amortised cost
using the effective interest method less
impairment. Interest income is recognised
by applying the effective interest rate,
except for short-term receivables when
the recognition of interest would be
immaterial.
Appropriate allowances for estimated
irrecoverable amounts are recognised in
the consolidated statement of profit or loss
where there is objective evidence that the
asset is impaired. The allowance recognised
is measured as the difference between the
assets’s carrying amount and the present
value of estimated future cash flows
discounted at the effective interest rate
computed at initial recognition.
The allowance for doubtful debts reflects
estimates of losses arising from the failure
or inability of the Group’s customers to
make required payments. The estimates
are based on the ageing of customer’s
accounts and the Group’s historical writeoff experience.
vii) Cash and cash equivalents
Cash and cash equivalents comprise cash
on hand and demand deposits and other
short-term highly liquid investments that
are readily convertible to a known amount
of cash and are subject to an insignificant
risk of changes in value.
profit or loss’ (“FVTPL”) or other financial
liabilities.
obligations are discharged, cancelled or
they expire.
ix) Financial guarantee contract
liabilities
xiii) Derivative financial instruments
Financial guarantee contract liabilities are
measured initially at their fair values and are
subsequently measured at the higher of:
• the amount of the obligation under the
contract, as determined in accordance
with IAS 37 Provisions, Contingent
Liabilities and Contingent Assets; and
The Group enters into a variety of
derivative financial instruments to manage
its exposure to interest rate and foreign
exchange rate risk, including forward
foreign exchange contracts, interest rate
swaps and cross currency swaps.
• the amount initially recognised
less, where appropriate, cumulative
amortisation recognised in accordance
with the revenue recognition policies
set out above.
Derivatives are initially recognised at fair
value on the date a derivative contract
is entered into and are subsequently
remeasured to their fair value at each
reporting date. A derivative with a positive
fair value is recognised as a financial asset
whereas a derivative with a negative fair
value is recognised as a financial liability.
x) Financial liabilities at FVTPL
xiv) Embedded derivatives
Financial liabilities are classified as at
FVTPL where the financial liability is
either held for trading or it is designated
as such. A financial liability is classified
as held for trading if it has been incurred
principally for the purpose of disposal in
the near future or it is a derivative that is
not designated and effective as a hedging
instrument. Financial liabilities at FVTPL
are stated at fair value, with any resultant
gain or loss recognised in the consolidated
statement of profit or loss.
Derivatives embedded in other financial
instruments or other host contracts are
treated as separate derivatives when their
risks and characteristics are not closely
related to those of host contracts and the
host contracts are not measured at fair value
with changes in fair value recognised in the
consolidated statement of profit or loss.
xi) Other financial liabilities
Other financial liabilities (including
borrowings and trade and other payables)
are subsequently measured at amortised
cost using the effective interest method,
with interest expense recognised on an
effective yield basis. The effective interest
method is a method of calculating the
amortised cost of a financial liability and
of allocating interest expense over the
relevant period. The effective interest
rate is the rate that exactly discounts
estimated future cash payments through
the expected life of the financial liability,
or, where appropriate, a shorter period.
viii) Financial liabilities
xii) Derecognition of financial
liabilities
Financial liabilities are classified as either
financial liabilities ‘at fair value through
The Group derecognises financial liabilities
when, and only when, the Group’s
xv) Hedge accounting
The Group may designate certain hedging
instruments, which include derivatives,
embedded derivatives and non-derivatives
in respect of foreign exchange risk, as
either fair value hedges, cash flow hedges,
or hedges of net investments in foreign
operations. Hedges of foreign exchange
risk on firm commitments are accounted
for as cash flow hedges where appropriate
criteria are met.
At the inception of the hedge relationship,
the entity documents the relationship
between
the
hedging
instrument
and the hedged item, along with its
risk management objectives and its
strategy for undertaking various hedge
transactions. Furthermore, at the inception
of the hedge and on an ongoing basis, the
Group documents whether the hedging
instrument is highly effective in offsetting
changes in fair values or cash flows of the
hedged item.
Etisalat
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Financials
Emirates Telecommunications Corporation
Emirates Telecommunications Corporation
Notes to the consolidated financial statements for year ended 31 December 2014
Notes to the consolidated financial statements for year ended 31 December 2014
2. Significant accounting policies (continued)
3. Critical accounting judgements and key sources of estimation uncertainty (continued)
Financial instruments (continued)
xvi) Put option arrangements
The potential cash payments related to put
options issued by the Group over the equity
of subsidiary companies are accounted for
as financial liabilities when such options
may only be settled other than by exchange
of a fixed amount of cash or another
financial asset for a fixed number of shares
in the subsidiary.
The amount that may become payable
under the option on exercise is initially
recognised at fair value within borrowings
with a corresponding charge directly to
equity. The charge to equity is recognised
separately as written put options over
non-controlling interests, adjacent to
non-controlling interests in the net assets
of consolidated subsidiaries. For options
that involve a fixed amount of cash for a
fixed number of shares in the subsidiary,
the Group recognises the cost of writing
such put options, determined as the excess
of the fair value of the option over any
consideration received, as a financing cost.
Such options are subsequently measured at
amortised cost, using the effective interest
rate method, in order to accrete the liability
up to the amount payable under the option
at the date at which it first becomes
exercisable. The charge arising is recorded
as a financing cost. In the event that the
option expires unexercised, the liability
is derecognised with a corresponding
adjustment to equity.
xvii) Derecognition of financial assets
The Group derecognises a financial asset
only when the contractual rights to the cash
flows from the asset expire; or it transfers
the financial asset or substantially all the
risk and rewards of ownership to another
entity. If the Group neither transfer nor
retains substantially all the risks and reward
of ownership and continues to control the
transferred asset, the Group recognises its
retained interest in the asset and associated
liability for amounts it may have to pay. If
the Group retains substantially all the risks
and rewards of ownership of a transferred
financial asset, the Group continues to
recognise the financial asset and also
recognises a collateralised borrowing for
the proceeds received.
xviii) Financial asset at fair value
through profit or loss
A financial asset at fair value through
profit or loss is a financial asset that meets
either of the following conditions:
a) It is classified as held for trading, i.e. it
is:
(i) acquired or incurred principally
for the purpose of selling or
repurchasing it in the near term;
(ii) part of a portfolio of identified
financial instruments that are
managed together and for which
there is evidence of a recent actual
pattern of short-term profit taking;
or
(iii) a derivative (except for a derivative
that is a designated and effective
hedging instrument).
b) Upon initial recognition it is designated
by the entity as “at fair value through
profit or loss” (FVTPL). An entity may
use this designation only when doing
so results in more relevant information
(i.e. it eliminates or significantly
reduces a measurement or recognition
inconsistency that would otherwise
arise from measuring assets or liabilities
and their gains and losses on different
basis; or a group of financial assets and/
or financial liabilities is both managed
and its performance is evaluated on a
fair value basis; or if the instrument
contains one or more embedded
derivatives)
Provisions
Provisions are recognised when the Group
has a present obligation as a result of a past
event, and it is probable that the Group
will be required to settle that obligation.
Provisions are measured at the directors’
best estimate of the expenditure required
to settle the obligation at the reporting
date, and are discounted to present value
where the effect is material.
Transactions with non-controlling
interests
76
Annual Report 2014
The relative size of the Group’s intangible
assets, excluding goodwill, makes the
judgements surrounding the estimated
useful lives critical to the Group’s financial
position and performance.
The useful lives used to amortise intangible
assets relate to the future performance
of the assets acquired and management’s
judgement of the period over which
economic benefit will be derived from the
asset.
ii) Business combinations
The Group applies a policy of treating
transactions with non-controlling interest
holders as transactions with parties
external to the Group. Disposals to noncontrolling interest holders result in gains
and losses for the Group and are recorded
in the consolidated statement of profit
or loss. Purchases from non-controlling
interest holders result in goodwill, being
the difference between any considerations
paid and the relevant share acquired of
the carrying value of net assets of the
subsidiary.
The recognition of business combinations
requires the purchase price of acquisitions
to be allocated to the identifiable assets
acquired and the liabilities assumed
measured at their acquisition-date fair
values. The Group makes judgments and
estimates in relation to the fair value
determination of the assets acquired and
liabilities assumed and allocation of the
purchase price. If any unallocated portion
is positive it is recognised as goodwill and if
negative, it is recognised in the statement
of profit or loss.
Dividends
iii) Impairment of goodwill and
associates
Dividend distributions to the Group’s
shareholders are recognised as a liability
in the consolidated financial statements
in the period in which the dividends are
approved.
3. Critical accounting judgements and key sources of estimation uncertainty
In the application of the Group’s
accounting policies, which are described in
Note 2, the directors are required to make
judgements, estimates and assumptions
about the carrying amounts of assets and
liabilities that are not readily apparent
from other sources. The estimates and
associated assumptions are based on
historical experience and other factors
that are considered to be relevant. Actual
results may differ from these estimates.
may include licenses, customer bases and
brands. The fair value of these assets is
determined by discounting estimated
future net cash flows generated by the
asset, where no active market for the assets
exists. The use of different assumptions
for the expectations of future cash flows
and the discount rate would change the
valuation of the intangible assets.
The estimates and underlying assumptions
are reviewed on an ongoing basis. Revisions
to accounting estimates are recognised in
the period in which the estimate is revised
if the revision affects only that period or
in the period of the revision and future
periods if the revision affects both current
and future periods.
uncertainty at the reporting date, that
have a significant risk of causing a material
adjustment to the carrying amounts
of assets and liabilities within the next
financial year, are disclosed below.
The key assumptions concerning the
future, and other key sources of estimation
On the acquisition of mobile network
operators, the identifiable intangible assets
i) Fair value of other intangible
assets
Determining whether goodwill is impaired
requires an estimation of the value-in-use
of the cash-generating unit to which the
goodwill has been allocated. The value-inuse calculation for goodwill and associates
requires the Group to calculate the net
present value of the future cash flows for
which certain assumptions are required,
including management’s expectations of:
• long term growth rates in cash flows;
• timing and quantum of future capital
expenditure; and
• the selection of discount rates to reflect
the risks involved.
The key assumptions used and sensitivities
are detailed on Note 9 of the consolidated
financial statements. A change in the key
assumptions or forecasts might result in an
impairment of goodwill and investment in
associates.
iv) Impairment of intangibles
Impairment testing is an area involving
management
judgement,
requiring
assessment as to whether the carrying
value of assets can be supported by the
net present value of future cash flows
derived from such assets using cash flow
projections which have been discounted
at an appropriate rate. In calculating the
net present value of the future cash flows,
certain assumptions are required to be
made in respect of highly uncertain matters
including management’s expectations of:
• long term growth rates in cash flows;
• timing and quantum of future capital
expenditure; and
• the selection of discount rates to reflect
the risks involved.
v) Property, plant and equipment
Property, plant and equipment represent
a significant proportion of the total assets
of the Group. Therefore, the estimates
and assumptions made to determine their
carrying value and related depreciation are
critical to the Group’s financial position
and performance. The charge in respect
of periodic depreciation is derived after
determining an estimate of an asset’s
expected useful life and the expected
residual value at the end of its life.
Increasing/decreasing an asset’s expected
life or its residual value would result in a
reduced/increased depreciation charge in
the consolidated statement of profit or loss.
vi) Impairment of trade receivables
The Group determines the impairment of
trade receivables based on their ageing
when objective evidence indicates that one
or more events have had a negative effect
on the estimated future cash flows of the
trade receivables. Management exercises
significant judgments in assessing the
impact of adverse indicators and events on
recoverability of trade receivables.
vii) Classification of associates, joint
ventures and subsidiaries
The appropriate classification of certain
investments as subsidiaries, associates
and joint ventures requires significant
analysis and management judgement as
to whether the Group exercises control,
significant influence or joint control
over these investments. This may involve
consideration of a number of factors,
including ownership and voting rights, the
extent of Board representation, contractual
arrangements and indicators of defacto
control.
Changes to these indicators and
management’s assessment of the power to
control or influence may have a material
impact on the classification of such
investments and the Group’s consolidated
financial position, revenue and results.
viii) Federal royalty
The computation of Federal Royalty in
accordance with the Cabinet of Ministers
of UAE decision No. 320/15/23 of 2012
and guidelines issued by the UAE Ministry
of Finance (“the MoF”) dated 21 January
2013 and subsequent clarification letters
dated 24 April 2013, 30 October 2013
and 29 January 2014 requires a number
of calculations. In performing these
calculations, management has made
certain critical judgments, interpretations
and assumptions. These mainly relate
to the segregation of items between
regulated and other activities and items
which the Corporation judges as not
subject to Federal royalty or which may be
set off against profits which are subject to
Federal royalty.
In addition, during the year, certain
clarifications have been received from
Ministry of Finance vide its letter dated
23 December 2014 on the mechanism of
computation of federal royalty for the
prior years. These clarifications have been
considered for the computation of federal
royalty for the year ended 31 December
2014.
The calculation basis and methodology to
be applied for future periods is still subject
to ongoing discussion and may change.
Etisalat
77
Financials
Emirates Telecommunications Corporation
Emirates Telecommunications Corporation
Notes to the consolidated financial statements for year ended 31 December 2014
Notes to the consolidated financial statements for year ended 31 December 2014
3. Critical accounting judgements and key sources of estimation uncertainty (continued)
4. Segmental information (continued)
ix) Regulatory expenses
The Corporation is required to pay the
UAE
Telecommunication
Regulatory
Authority (TRA) 1% of its revenues
annually as regulatory expenses towards
ICT contributions. In the computation of
the regulatory expenses, the Corporation
has made certain critical judgments
and assumptions relating mainly to the
interpretation of revenues, which the
Corporation contends to include UAE
regulated revenues only and not revenues
in other UAE entities as well as overseas
subsidiaries.
x) Valuation of derivative financial
instruments
The fair values of derivative financial
instruments measured at fair value or
generally obtained by reference to quoted
market prices, discounted cash flow
models and recognized pricing models
as appropriate. Information about the
valuation techniques and inputs used in
determining the fair value of derivative are
disclosed in note 22.
xi) Recognition of deferred tax asset
International
is based upon whether it is more likely
than not that there will be sufficient
and suitable taxable profits in the
relevant legal entity or tax group against
which to utilise the assets in the future.
Judgement is required when determining
probable future taxable profits, which are
estimated using the latest available profit
forecasts. Prior to recording deferred tax
assets for tax losses, relevant tax law is
considered to determine the availability
of the losses to offset against the future
taxable profit.
The recognition of deferred tax asset
4. Segmental information
Information regarding the Group’s
operating segments is set out below
in accordance with IFRS 8 Operating
Segments. IFRS 8 requires operating
segments to be identified on the basis of
internal reports that are regularly reviewed
by the Group’s chief operating decision
maker and used to allocate resources to the
segments and to assess their performance.
a) Products and services from which
reportable segments derive their
revenues
The Group is engaged in a single
line of business, being the supply of
telecommunications services and related
products. The majority of the Group’s
revenues, profits and assets relate to its
operations in the UAE. Outside of the UAE,
the Group operates through its subsidiaries
and associates in nineteen countries which
are divided in to the following operating
segments:
• Pakistan
• Egypt
• Morocco
• International - others
Revenue is attributed to an operating
segment based on the location of the
Group Company reporting the revenue.
Inter-segment sales are charged at arms’
length prices.
b) Segment revenues and results
Segment results represent operating
profit earned by each segment without
allocation of finance income, finance costs
and federal royalty. This is the measure
reported to the Group’s Board of Directors
(“Board of Directors”) for the purposes
of resource allocation and assessment of
segment performance.
The Group’s share of results from associates
and joint ventures has been allocated to
the segments based on the geographical
location of the operations of the
associate and joint venture investments.
The allocation is in line with how results
from investments in associates and joint
ventures are reported to the Board of
Directors.
c) Segment assets
For the purposes of monitoring segment
performance and allocating resources
between segments, the Board of Directors
monitors the tangible, intangible and
financial assets attributable to each
segment. All assets are allocated to
reportable segments. Goodwill is allocated
to reportable segments. Assets used jointly
by reportable segments are allocated
on the basis of the revenues earned by
individual reportable segments.
The segment information has
provided on the following page.
been
31 December 2014
Revenue
External sales
Inter-segment sales
Total revenue
Segment result
Federal royalty
Finance and other income
Finance and other costs
Profit before tax
Taxation
Profit for the year from
continuing operations
Total assets
Depreciation and amortisation
Impairment
Additions to non-current assets
31 December 2013
Revenue
External sales
Inter-segment sales
Total revenue
Segment result
Federal royalty
Finance and other income
Finance and other costs
Profit before tax
Taxation
Profit for the period
Total assets
Depreciation and amortisation
Impairment
Additions to non-current assets
UAE
AED’000
Morocco
AED’000
Egypt
AED’000
Pakistan
AED’000
Others
AED’000
Eliminations
AED’000
Consolidated
AED’000
27,807,689
454,367
28,262,056
13,234,681
6,061,090
38,089
6,099,179
2,114,237
4,814,366
29,983
4,844,349
834,616
4,436,395
282,143
4,718,538
126,922
5,647,335
175,469
5,822,804
(769,192)
(980,051)
(980,051)
-
48,766,875
48,766,875
15,541,264
(5,333,084)
2,653,494
(1,736,511)
11,125,163
(1,153,576)
9,971,587
54,041,272
1,767,218
2,598,158
34,685,813
2,254,830
1,631,061
13,907,277
926,980
1,028,923
20,868,347
1,079,446
2,965,269
17,022,290
829,744
931,963
690,147
(10,940,441)
-
129,584,558
6,858,218
931,963
8,913,558
25,453,493
510,041
25,963,534
11,543,769
-
4,715,665
25,855
4,741,520
581,998
4,425,863
335,065
4,760,928
697,448
3,969,160
107,661
4,076,821
1,723,926
(978,622)
(978,622)
-
48,787,000
1,889,102
2,063,453
-
13,766,144
992,416
1,228,969
18,117,964
967,020
16,293
1,391,760
16,717,794
759,010
1,357,883
1,649,704
(11,673,368)
-
38,564,181
38,564,181
14,547,141
(6,115,016)
468,558
(437,572)
8,463,111
(648,647)
7,814,464
85,715,534
4,607,548
1,374,176
6,333,886
2014
AED million
2013
AED million
23,741
4,521
28,262
22,758
3,206
25,964
2014
AED million
2013
AED million
540,328
6,818
384,817
931,963
43,063
40,620
4,325
515,875
264,309
505,984
1,374,176
UAE Segment revenue
breakup:
UAE Revenue - TRA regulated
UAE Revenue - Non-regulated
Impairment detail
of which relating to goodwill
of which relating to property, plant and equipment (Note 10)
of which relating to other financial assets
of which relating to loans to related party
of which relating to available-for-sale financial assets (quoted equity instruments) (Note 29)
of which other losses
There are no comparative amounts disclosed for Morocco segment as Maroc Telecom was acquired during the period. The comparative
figures for total assets for 2013 have been reclassified to conform with current period’s presentation.
78
Annual Report 2014
Etisalat
79
Financials
Emirates Telecommunications Corporation
Emirates Telecommunications Corporation
Notes to the consolidated financial statements for year ended 31 December 2014
Notes to the consolidated financial statements for year ended 31 December 2014
5. Operating expenses and federal royalty
7. Finance and other costs
a) Operating expenses (before federal royalty)
2014
AED’000
2013
AED’000
10,453,322
8,613,096
6,156,004
5,095,467
Depreciation (Notes 10,11)
5,111,162
Network and other related costs
2014
AED’000
2013
AED’000
Interest on bank overdrafts, loans and other financial liabilities
431,990
293,569
Interest on other borrowings
662,292
96,091
3,732,211
Other costs (Note 30)
620,964
-
2,813,011
2,136,261
Unwinding of discount
21,265
47,912
Amortisation (Note 9)
1,685,022
807,181
1,736,511
437,572
Marketing expenses
1,278,317
876,933
Total borrowing costs
1,763,011
461,898
Regulatory expenses
721,214
661,795
Less: amounts included in the cost of qualifying assets (Note 10)
(26,500)
(24,326)
Operating lease rentals
120,443
255,373
1,736,511
437,572
Foreign exchange (losses)/gains
(365,664)
193,450
Other operating expenses
3,859,752
2,025,438
31,832,583
24,397,205
Direct cost of sales
Staff costs
Operating expenses (before federal royalty)
b) Federal Royalty
In accordance with the Cabinet decision No.
558/1 for the year 1991, the Corporation
was required to pay a federal royalty,
equivalent to 40% of its annual net profit
before such federal royalty, to the UAE
Government for use of federal facilities.
With effect from 1 June 1998, Cabinet
decision No. 325/28M for 1998 increased
the federal royalty payable to 50%.
On 9 December 2012, the Cabinet of
Ministers of UAE issued decision no.
320/15/23 of 2012 in respect of a new
royalty mechanism applicable to Etisalat.
Under the new mechanism a distinction
is made between revenue earned from
services regulated by Telecommunications
Regulatory Authority (“TRA”) and nonregulated services as well as between
foreign and local profits.
Etisalat is required to pay 15 % royalty fee
on the UAE regulated revenues and 35 %
of net profit after deduction of the 15 %
royalty fee on the UAE regulated revenues.
In respect of foreign profit, the 35 %
royalty is reduced by the amount that the
foreign profit has already been subject to
foreign taxes. Ministry of Finance have confirmed via
their letter dated 29 January 2014 that
the mechanism of calculating the royalty
fee for the year ended 31 December 2013
was to follow the same principles that were
applicable for the calculation of royalty
fees for the year ended 31 December
2012. The mechanism for computation
of federal royalty for the period ended
31 December 2014 is consistent with the
mechanism followed for the computation
of the federal royalty for the year ended 31
December 2013.
In addition, during the year, certain
clarifications have been received from
Ministry of Finance on the mechanism
of computation of federal royalty for the
prior years. These clarifications have been
considered for the computation of federal
royalty for the year ended 31 December
2014. The Corporation is engaged in
discussions with Ministry of finance on
items which it considers as not subject to
Royalty.
The federal royalty has been treated as
an operating expense in the consolidated
statement of profit or loss on the basis
that the expenses the Corporation would
otherwise have had to incur for the use
of the federal facilities would have been
classified as operating expenses.
Other income
80
Annual Report 2014
the year arose on specific and general
borrowing pools. Borrowing costs
attributable to general borrowing pools are
calculated by applying a capitalisation rate
2014
AED’000
2013
AED’000
Current tax expense
1,506,816
496,907
Deferred tax (credit) / expense
(353,240)
151,740
1,153,576
648,647
a) Current tax
Corporate income tax is not levied in the
UAE for telecommunication companies and
accordingly the effective tax rate for the
Corporation is 0% (2013: 0%). The table
below reconciles the difference between
Profit before tax
Effect of different tax rates of subsidiaries operating in other jurisdictions
Current tax expense for the year
2014
AED’000
2013
AED’000
388,899
315,416
2,264,595
153,142
2,653,494
468,558
of 9.28% (2013: 10.0%) to expenditure on
such assets. Borrowing costs have been
capitalised in relation to loans by certain
of the Group’s subsidiaries.
8. Taxation
Tax at the UAE corporation tax rate of 0% (2013: 0%)
6. Finance and other income
Interest on bank deposits and held-to-maturity investment
All interest charges are generated on the
Group’s financial liabilities measured at
amortised cost. Borrowing costs included
in the cost of qualifying assets during
b) Current income tax assets and
liabilities
The current income tax assets represent
refunds receivable from tax authorities
and current income tax liabilities represent
income tax payable.
the expected tax expense, (based on the
UAE effective tax rate) and the Group’s tax
charge for the year.
2014
AED’000
2013
AED’000
11,125,163
8,463,111
-
-
1,506,816
496,907
1,506,816
496,907
c) Deferred tax
Deferred tax assets and liabilities are offset
when there is a legally enforceable right
to offset current tax assets against current
tax liabilities and when these relate to the
same income tax authority. The amounts
recognised in the consolidated statement
of financial position after such offset are
as follows:
Etisalat
81
Financials
Emirates Telecommunications Corporation
Emirates Telecommunications Corporation
Notes to the consolidated financial statements for year ended 31 December 2014
Notes to the consolidated financial statements for year ended 31 December 2014
8. Taxation (continued)
9. Goodwill, other intangible assets, impairment and other losses
Deferred tax assets
Deferred tax liabilities
2014
AED’000
2013
AED’000
317,383
243,042
(4,740,292)
(1,749,839)
(4,422,909)
(1,506,797)
Goodwill
AED’000
Other intangible
assets
AED’000
Total
AED’000
7,507,405
16,024,057
23,531,462
-
766,638
766,638
(332,498)
(944,227)
(1,276,725)
7,174,907
15,846,468
23,021,375
1,578,318
5,797,949
7,376,267
-
809,093
809,093
43,063
-
43,063
1,260
(207,855)
(206,595)
1,622,641
6,399,187
8,021,828
5,552,266
9,447,281
14,999,547
7,174,907
15,846,468
23,021,375
-
2,038,764
2,038,764
11,761,694
10,729,232
22,490,926
(44,896)
(114,539)
(159,435)
-
(25,660)
(25,660)
(1,047,116)
(2,054,310)
(3,101,426)
17,844,589
26,419,955
44,264,544
1,622,641
6,399,187
8,021,828
-
1,694,716
1,694,716
540,328
-
540,328
Elimination on items reclassified as held for sale (Note 36)
-
(40,464)
(40,464)
Disposals
-
(25,635)
(25,635)
(8,762)
(702,625)
(711,387)
2,154,207
7,325,179
9,479,386
15,690,382
19,094,776
34,785,158
Cost
At 1 January 2013
Additions
The following represent the major deferred tax liabilities and deferred tax assets recognised by the Group and movements thereon without
taking into consideration the offsetting of balances within the same tax jurisdiction.
Deferred tax liabilities
At 1 January 2013
(Credit)/charge to the consolidated statement of profit or loss
Accelerated tax
depreciation
AED’000
Deferred tax on
overseas earnings
AED’000
Others
AED’000
Total
AED’000
1,976,983
159,582
41,194
2,177,759
6,121
21,661
(6,223)
21,559
-
-
(53)
(53)
(173,723)
-
14,838
(158,885)
1,809,381
181,243
49,756
2,040,380
70,150
(22,882)
(205,012)
(157,744)
-
-
3,494
3,494
(Credit)/charge to other comprehensive income
Exchange differences
At 31 December 2013
(Credit)/charge to the consolidated statement of profit or loss
(Credit)/charge to other comprehensive income
Acquisition of Maroc Telecom (Note 30)
Exchange differences
At 31 December 2014
Deferred tax assets
-
-
3,637,635
3,637,635
85,296
-
(381,403)
(296,107)
1,964,827
158,361
3,104,470
5,227,658
Tax losses
AED’000
Others
AED’000
Total
AED’000
At 1 January 2013
167,821
331,522
146,970
646,313
Charge/(Credit) to the consolidated statement of profit or loss
(44,107)
(73,906)
(12,168)
(130,181)
62,913
2,407
165
65,485
(13,160)
(25,566)
(9,308)
(48,034)
173,467
234,457
125,659
533,583
1,262
66,869
79,572
147,703
74,497
-
1,572
76,069
-
-
46,955
46,955
8,596
(7,860)
(298)
438
257,822
293,466
253,461
804,749
2014
AED million
2013
AED million
Total unused tax losses
1,554
1,642
of which deferred tax assets recognised for
1,272
1,153
251
489
30
71
Exchange differences
At 31 December 2013
(Credit)/charge to the consolidated statement of profit or loss
(Credit)/charge to other comprehensive income
Acquisition of Maroc Telecom (Note 30)
Exchange differences
At 31 December 2014
Unused tax losses
of which no deferred tax asset recognised, due to unpredictability of future taxable profit streams
of the unrecognized tax losses, losses that will expire in the next three years are
82
Annual Report 2014
At 31 December 2013
Amortisation and impairment
At 1 January 2013
Charge for the year
Impairment losses
Exchange differences
At 31 December 2013
Carrying amount
At 31 December 2013
Cost
At 1 January 2014
Additions
Retirement benefit
obligations
AED’000
(Credit)/charge to other comprehensive income
Exchange differences
Acquisition of Maroc Telecom (Note 30)
Reclassified as held for sale (Note 36)
Disposals
Exchange differences
At 31 December 2014
Amortisation and impairment
At 1 January 2014
Charge for the year
Impairment losses
Exchange differences
At 31 December 2014
Carrying amount
At 31 December 2014
Etisalat
83
Financials
Emirates Telecommunications Corporation
Emirates Telecommunications Corporation
Notes to the consolidated financial statements for year ended 31 December 2014
Notes to the consolidated financial statements for year ended 31 December 2014
9. Goodwill, other intangible assets, impairment and other losses (continued)
9. Goodwill, other intangible assets, impairment and other losses (continued)
Other intangible assets - net book values
Cash generating units (CGU) to which goodwill is allocated
2014
AED’000
2013
AED’000
14,066,257
8,046,956
IRU
564,917
387,804
Maroc Telecom International Subsidiaries
Computer software
Licenses
Maroc Telecom
2014
AED’000
2013
AED’000
9,246,613
-
1,291,211
-
4,252,905
4,055,239
890,352
231,933
Pakistan Telecommunication Company Limited (PTCL)
Customer relationships
1,099,868
405,005
Atlantique Telecom, S.A. (AT)
667,224
1,218,897
Trade names
2,155,596
221,206
Etisalat Misr (Etisalat) S.A.E.
26,306
27,111
317,786
154,377
Zanzibar Telecom Limited (Zantel)
-
44,896
19,094,776
9,447,281
206,123
206,123
15,690,382
5,552,266
Others
Etisalat Lanka (Pvt) Limited (Etisalat Lanka)
a) Impairment and other losses
The net impairment losses recognised in the consolidated statement of profit or loss in respect of the carrying amounts of investments,
goodwill, licenses and property, plant and equipment are as follows:
2014
AED’000
2013
AED’000
-
16,293
of which relating to carrying amount of investment in associate (Note 14b)
-
-
of which relating to property, plant and equipment (Note 10)
-
16,293
Pakistan Telecommunication Company Limited (PTCL)
Atlantique Telecom S.A (AT)
923,339
71,715
of which relating to goodwill
540,328
43,063
-
24,327
383,011
4,325
8,624
1,286,168
of which relating to loans to related party
-
515,875
of which relating to available-for-sale financial assets (quoted equity instruments) (Note 29)
-
264,309
of which relating to property, plant and equipment (Note 10)
6,818
-
of which relating to other financial assets
1,806
-
-
505,984
931,963
1,374,176
of which relating to property, plant and equipment (Note 10)
of which relating to other financial assets
Others
of which other losses
Total impairment and other losses for the year
Impairment losses were primarily driven
by increased discount rates as a result of
increases in inflation in the operating
countries and challenging economic and
political conditions, as well as negative
local currency fluctuation. Impairment
losses of Group›s investment in availablefor-sale financial assets was triggered by a
84
Annual Report 2014
significant decline in the fair value of the
quoted investment.
b) Cash generating units
Goodwill acquired in a business
combination is allocated, at acquisition,
to the CGUs that are expected to benefit
from that business combination. The Group
c) Key assumptions for the value in
use calculations
The key assumptions for the value in use
calculations are those regarding the long
term forecast cash flows, discount rates
and capital expenditure.
Long term cash flows
The Group prepares cash flow forecasts
derived from the most recent annual
business plan approved by management
for each location for the next five years.
The business plans take into account local
market considerations such as the revenues
and costs associated with future customer
growth, the impact of local market
competition and consideration of the local
macro-economic and political trading
environment. This rate does not exceed
the average long-term growth rate for the
relevant markets and it ranges between
3.09% to 6.7% (2013: 2.6% to 6.3%).
Discount rates
The discount rates applied to the cash
flows of each of the Group’s operations are
based on an internal study conducted by
the management. The study utilized market
data and information from comparable
listed
mobile
telecommunications
companies and where available and
appropriate, across a specific territory.
The pre-tax discount rates use a forward
looking equity market risk premium and
ranges between 11.0% to 18.1% (2013:
13.9% to 19.3%).
Capital expenditure
The cash flow forecasts for capital
expenditure are based on past experience
and include the ongoing capital
expenditure required to continue rolling
out networks in emerging markets,
providing enhanced voice and data
products and services, and meeting the
population coverage requirements of
certain licenses of the Group. Capital
expenditure includes cash outflows for the
purchase of property, plant and equipment
and other intangible assets.
tests goodwill annually for impairment or
more frequently if there are indications
that goodwill might be impaired. The
carrying amount of goodwill (all relating to
operations within the Group’s International
reportable segment) is allocated to the
following CGUs:
Etisalat
85
Financials
Emirates Telecommunications Corporation
Emirates Telecommunications Corporation
Notes to the consolidated financial statements for year ended 31 December 2014
Notes to the consolidated financial statements for year ended 31 December 2014
10. Property, plant and equipment (continued)
10. Property, plant and equipment
Land and
buildings
AED’000
Plant and
equipment
AED’000
Motor vehicles,
computer, furniture
AED’000
Assets under
construction
AED’000
Total
AED’000
8,566,580
44,833,427
3,421,778
6,073,394
62,895,179
Additions
17,576
1,178,689
104,735
4,263,687
5,564,687
Transfers
187,069
4,007,140
1,052,034
(5,246,243)
-
Disposals
(239)
(158,289)
(29,351)
(44,430)
(232,309)
(393,731)
(1,609,659)
(180,586)
(111,091)
(2,295,067)
8,377,255
48,251,308
4,368,610
4,935,317
65,932,490
2,597,893
26,761,597
2,435,245
59,767
31,854,502
109,735
2,962,777
722,912
-
3,795,424
Cost
At 1 January 2013
Exchange differences
At 31 December 2013
The carrying amount of the Group’s land
and buildings includes a nominal amount
of AED 1 (2013: AED 1) in relation to land
granted to the Group by the Government.
There are no contingencies attached
to this grant and as such no additional
amounts have been included in the
consolidated statement of profit or loss
or the consolidated statement of financial
position in relation to this.
An amount of AED 26.5 million (2013: AED
24.3 million) is included in property, plant
and equipment on account of capitalisation
of borrowing costs for the year.
Charge for the year
Impairment losses
Disposals
Exchange differences
At 31 December 2013
-
40,620
-
-
40,620
(27)
(134,902)
(23,791)
-
(158,720)
(20,264)
(799,800)
(98,433)
-
(918,497)
2,687,337
28,830,292
3,035,933
59,767
34,613,329
5,689,918
19,421,016
1,332,677
4,875,550
31,319,161
Carrying amount
At 31 December 2013
Investment property, which is property
held to earn rentals and/or for capital
appreciation, is stated at depreciated cost
and included separately under non-current
At 1 January 2014
8,377,255
48,251,308
4,368,610
4,935,317
65,932,490
195,113
1,267,828
118,640
5,290,561
6,872,142
2,092,884
12,325,579
393,038
75,457
14,886,958
Transfers
154,711
4,591,962
790,718
(5,537,391)
-
Disposals
(95,811)
(739,352)
(186,530)
(28,258)
(1,049,951)
Additions
Acquisition of Maroc Telecom (Note 30)
Reclassified as held for sale (Note 36)
Exchange differences
At 31 December 2014
(14,032)
(499,415)
(55,271)
(78,138)
(646,856)
(241,164)
(3,046,779)
(276,947)
(79,127)
(3,644,017)
10,468,956
62,151,131
5,152,257
4,578,421
82,350,766
Depreciation and impairment
At 1 January 2014
Charge for the year
Impairment losses
Disposals
Elimination on items reclassified as held
for sale (Note 36)
Exchange differences
At 31 December 2014
2,687,337
28,830,292
3,035,933
59,767
34,613,329
186,961
4,195,564
-
-
778,490
-
5,161,015
6,818
-
6,818
(63,626)
(607,979)
(139,206)
-
(810,811)
(11,850)
(328,525)
(51,236)
-
(391,611)
(227,978)
(1,748,506)
(224,102)
-
(2,200,586)
2,570,844
30,340,846
3,406,697
59,767
36,378,154
7,898,112
31,810,285
1,745,559
4,518,654
45,972,612
assets in the consolidated statement of
financial position.
2014
AED’000
2013
AED’000
56,771
54,210
2,654
2,561
59,425
56,771
15,560
12,529
2,487
3,031
At 31 December
18,047
15,560
Carrying amount at 31 December
41,378
41,211
Fair value at 31 December
70,450
65,842
Cost
At 1 January
Additions
At 31 December
Depreciation
At 1 January
Additions
Cost
Assets under construction include building,
multiplex equipment, line plant, exchange
and network equipment.
11. Investment property
Depreciation and impairment
At 1 January 2013
Borrowings are secured against property,
plant and equipment with a net book value
of AED 3,195 million (2013: AED 2,781
million).
Investment property rental income and direct operating expenses
Property rental income
Direct operating expenses
The fair values of the Group’s investment
property has been arrived at on the basis of
a valuation carried out by internal valuers.
The valuation technique is considered as “Cost
2014
2013
AED million
AED million
10.9
12.0
1.3
1.0
approach” based on “market corroborated
inputs” and is classified as “Level-2” fair value.
Carrying amount
At 31 December 2014
86
Annual Report 2014
Etisalat
87
Financials
Emirates Telecommunications Corporation
Emirates Telecommunications Corporation
Notes to the consolidated financial statements for year ended 31 December 2014
Notes to the consolidated financial statements for year ended 31 December 2014
12. Subsidiaries
12. Subsidiaries (continued)
a) The Group’s principal subsidiaries are as follows:
b) Disclosures relating to subsidiaries
Percentage shareholding
Country of
incorporation
Principal activity
Emirates Telecommunications and Marine
Services FZE
UAE
Emirates Cable TV and Multimedia LLC
Name
2014
2013
Telecommunications services
100%
100%
UAE
Cable television services
100%
100%
Etisalat International Pakistan LLC
UAE
Holds investment in Pakistan
Telecommunication Co. Ltd
90%
90%
E-Marine PJSC
UAE
Submarine cable activities
100%
100%
Etisalat Services Holding LLC
UAE
Infrastructure services
100%
100%
Etisalat Software Solutions (Private) Limited
India
Technology solutions
100%
100%
Zanzibar Telecom Limited
Tanzania
Telecommunications services
85%
65%
Canar Telecommunications Co. Limited
Republic of
Sudan
Telecommunications services
90%
90%
Etisalat International Nigeria Limited
UAE
Holds investment in Emerging Market
Telecommunications Services B.V.
(Netherlands)
100%
100%
Etisalat Afghanistan
Afghanistan
Telecommunications services
100%
100%
Etisalat Misr S.A.E.
Egypt
Telecommunications services
66%
66%
Atlantique Telecom S.A.
Cote d’Ivoire
Telecommunications services
100%
100%
Etisalat Benin
Benin
Telecommunications services
100%
100%
Etisalat Lanka (Pvt.) Limited
Sri Lanka
Telecommunications services
100%
100%
Pakistan Telecommunication Company Limited
Pakistan
Telecommunications services
23%
23%
Etisalat Investment North Africa LLC
UAE
Holds investment Société de Participation
dans les Télécommunications (SPT)
91.3%
0%
Société de Participation dans les
Télécommunications (SPT)
Kingdom of
Morocco
Holds investment in Maroc Telecom
100%
-
Etisalat Al Maghrib S.A (Maroc Telecom)
Kingdom of
Morocco
Telecommunications services
48%
-
Etisalat Mauritius Private Limited
Mauritius
Holds investment in Etisalat DB Telecom
Private Limited
100%
100%
On 14 May 2014, the Group completed
the acquisition at a net adjusted price of
EUR 4.1 billion (AED 20.9 billion), which
was primarily financed through external
borrowings under the facilities agreements
noted above. This amount includes the cash
value of the 2012 dividend, amounting to
EUR 0.3 billion (AED 1.5 billion).
In July 2014, the Group acquired additional
17% equity in Zantel from non-controlling
interests («NCI»). In September 2014, the
Group acquired an additional 3% in Zantel
which was issued through right shares.
88
Annual Report 2014
On 4 May 2014, the Group announced
the signing of an agreement with Maroc
Telecom for the sale of the Group›s
shareholdings in its operations in Benin,
CAR, Gabon, Cote d’Ivoire, Niger and Togo
to Maroc Telecom, for a total consideration
of EUR 474 million.
The transaction was closed on 26 January
2015 (Note 37) and will be accounted
for by the Group as a transaction under
common control.
During the year ended 31 December 2013,
Information relating to subsidiaries that have non-controlling interests that are material to the group are provided below:
Maroc Telecom
PTCL
Etisalat Misr
51.6%
76.6%
34%
828,140
88,622
162,138
Dividends
(1,215,766)
(291,237)
-
Non-controlling interests as at 31 December
3,839,633
4,977,393
2,716,757
4,270,395
2,761,353
1,561,629
Non-current assets
16,968,960
11,066,726
12,345,648
Current liabilities
10,082,959
2,849,027
4,177,413
3,714,540
4,481,150
1,581,349
AED’000
2014
Information relating to non-controlling interest:
Non-controlling interest (shareholding %)
Profit
Summarized information relating to subsidiary:
Current assets
Non-current liabilities
AED’000
2013
Information relating to non-controlling interest:
Non-controlling interest (shareholding %)
n/a*
76.6%
34%
Profit
n/a*
618,382
95,504
Total comprehensive income/(loss)
n/a*
(265,036)
(134,873)
Dividends
n/a*
(141,106)
-
Non-controlling interests as at 31 December
n/a*
4,820,564
2,635,964
Current assets
n/a*
2,546,468
1,093,194
Non-current assets
n/a*
8,578,638
12,672,950
Current liabilities
n/a*
2,051,623
3,675,356
Non-current liabilities
n/a*
2,780,319
2,169,319
Summarized information relating to subsidiary:
Atlantique Telecom S.A. (AT), a 100%
subsidiary of the Group, disposed 15%
shares of its subsidiary (Moov CDI) in Ivory
Coast for a consideration of AED 371 million.
* Etisalat Group acquired Maroc Telecom on 14th May 2014
AT transferred 3.98% of its shareholding in
another subsidiary (Moov Gabon) to comply
with the local regulations to increase the
shareholding of local shareholder to 10%.
During the year ended 31 December
2013, the Group also acquired additional
shareholding in Canar Telecommunications
Co. Limited and consequently Group’s
shareholding increased from 89% to 90%.
Etisalat
89
Financials
Emirates Telecommunications Corporation
Emirates Telecommunications Corporation
Notes to the consolidated financial statements for year ended 31 December 2014
Notes to the consolidated financial statements for year ended 31 December 2014
12. Subsidiaries (continued)
14. Investment in associates and joint ventures
a) Associates
c) Movement in non-controlling interests
Name
The movement in non-controlling interests is provided below:
Country of
incorporation
Principal activity
Percentage
shareholding
Saudi Arabia
Telecommunications services
27%
2014
AED’000
2013
AED’000
9,060,552
9,398,260
Thuraya Telecommunications Company PJSC (“Thuraya”)
UAE
Satellite communication services
28%
961,461
672,560
Emerging Markets Telecommunications Services Limited
(“EMTS Nigeria”)
Nigeria
Telecommunications services
40%
(108,642)
(96,989)
Exchange differences on translation of foreign operations
37,759
(859,520)
Loss on revaluation of available-for-sale financial assets
6,936
1,032
362
-
8,159,944
-
-
87,233
132,563
(5,782)
1,791,831
16,835
(1,392,078)
(153,077)
18,650,688
9,060,552
As at 1 January
Total comprehensive income:
Profit for the year
Remeasurement of defined benefit obligations - net of tax
Other movement in equity
Acquition of a subsidiary
Transaction with owners:
Disposal of partial interest in subsidiaries
Acquisition of non-controlling interests
Equity contribution from non-controlling interests for acquisition of a subsidiary
Dividends
As at 31 December
Etihad Etisalat Company (“Mobily”)
b) Movement in investments in associates
Mobily
All Associates
2014
AED’000
2013
AED’000
2014
AED’000
2013
AED’000
Carrying amount at 1 January
6,795,949
5,961,612
7,001,701
6,231,988
Share of results (Note 13)
(445,846)
1,807,648
(473,001)
1,743,379
-
-
40
(356)
(776,531)
(973,311)
(776,531)
(973,311)
5,573,572
6,795,949
5,752,209
7,001,701
Other movements
Dividends
Carrying amount at 31 December
c) Aggregated amounts relating to associates
Mobily
All Associates
13. Share of results of associates and joint ventures
Associates excluding EMTS (Note 14 b)
Joint ventures (Note 14 f)
Total
During the previous year, the Group has
reassessed its accounting treatment for
share of results of one of its associates.
Consequently, the Group has discontinued
the recognition of the share of results of
that associate with effect from 1 January
2013. Accordingly, no share of losses
have been offset against loans due from
associates as the investment in associate
has already been fully written down by
prior year losses. The amount receivable
towards interest on loan to the associate
of AED 718 million (2013: AED 633 million)
has been impaired during the year. The
net unrecognised share of losses in the
associate for the year ended 31 December
2014 amounts to AED 1,636 million
(2013: AED 630 million). The cumulative
net unrecognised share of losses as at 31
December 2014 amounts to AED 2,266
million (2013: AED 630 million).
During the year, Etihad Etisalat Company
(Mobily) has restated it›s prior year
2014
AED’000
2013
AED’000
(473,001)
1,743,379
11,936
10,962
(461,065)
1,754,341
financial statements as a result of an
error in the timing of revenue recognition
resulting from a promotional program. The
resulting impact of the restatement to the
consolidated financial statements of the
Group before federal royalty amounted
to AED 200 million which is considered as
immaterial and has been accounted for in
the current year share of results.
2014
AED’000
2013
AED’000
2014
AED’000
Current assets
12,262,830
14,383,036
13,134,348
15,204,318
Non-current assets
34,220,161
31,102,917
41,015,802
38,766,386
(27,276,983)
(12,285,770)
(31,272,340)
(14,638,751)
(195,663)
(10,455,078)
(15,724,817)
(25,117,047)
19,010,346
22,745,106
7,152,993
14,214,906
Current liabilities
Non-current liabilities
Net assets
Revenue
15,422,108
18,911,033
20,284,080
22,758,961
(Loss) / Profit
(894,481)
5,853,620
(6,008,153)
1,205,629
Total comprehensive (loss) / income
(894,481)
5,853,620
(6,008,153)
1,205,629
776,531
973,311
776,531
973,311
Dividends received
d) Market value of an associate
The shares of one of the Group’s associates are quoted on public stock markets and it is classified as “Level-1” fair value. The market value
of the Group’s shareholding based on the quoted prices is as follows:
Etihad Etisalat Company (“Mobily”)
90
Annual Report 2014
2013
AED’000
2014
AED’000
2013
AED’000
9,082,335
17,654,107
Etisalat
91
Financials
Emirates Telecommunications Corporation
Emirates Telecommunications Corporation
Notes to the consolidated financial statements for year ended 31 December 2014
Notes to the consolidated financial statements for year ended 31 December 2014
14. Investment in associates and joint ventures (continued)
15. Other investments
e) Joint ventures
Other investments comprise of the following, all of which are classified as available-for-sale, with the exception of the Sukuk, which are
classified as held-to-maturity investments.
Name
Country of
incorporation
Principal activity
Percentage
shareholding
Ubiquitous ‎Telecommunications ‎Technology LLC
UAE
Installation and ‎management of
‎network systems
50%
Smart Technology Services ‎DWC – LLC ‎
UAE
ICT Services
50%
f) Movement in investment in joint ventures
Carrying amount at 1 January
Share of results
Capital reduction
Dividends
Carrying amount at 31 December
2014
AED’000
2013
AED’000
60,309
93,347
11,936
10,962
-
(40,000)
(2,000)
(4,000)
70,245
60,309
g) Aggregated amounts relating to joint ventures
2014
AED’000
2013
AED’000
165,252
93,176
83,112
77,549
Current liabilities
(107,877)
(50,107)
Net assets
140,487
120,618
157,277
99,282
27,157
21,924
Current assets
Non-current assets
Revenue
Profit or loss
The Group has not identified any contingent liabilities or capital commitments in relation to its interest in joint ventures.
Fair value
through Profit
and loss
AED’000
Quoted equity
investments
AED’000
Un-quoted
equity
investments
AED’000
Sukuks
AED’000
Total
AED’000
At 1 January 2013
-
1,213,264
92,707
145,524
1,451,495
Additions
-
-
19,117
53,495
72,612
Transfer to other receivables
-
-
(65,286)
-
(65,286)
Investment revaluation
-
(138,909)
-
-
(138,909)
Sukuk redemption
-
-
-
(1,856)
(1,856)
Unwinding of discount
-
-
-
(1,578)
(1,578)
Exchange differences
-
-
(1,046)
-
(1,046)
At 31 December 2013
-
1,074,355
45,492
195,585
1,315,432
937
44,595
29,529
-
75,061
49,271
46,562
33,509
-
129,342
Disposal
-
(453,731)
(561)
-
(454,292)
Investment revaluation
-
(56,588)
-
-
(56,588)
Impairment
-
-
(3,061)
-
(3,061)
Reclassified as held for sale (Note 36)
-
-
(3,570)
-
(3,570)
(5,583)
(7,158)
(1,992)
(3,594)
(18,327)
44,625
648,035
99,346
191,991
983,997
Additions
Acquisition of Maroc Telecom (Note 30)
Exchange differences
At 31 December 2014
Quoted equity investments represent
investments in listed equity securities
that present the Group with opportunity
for return through dividend income and
capital growth. These shares are not held
for trading. The fair values of these equity
securities are derived from quoted prices in
active markets for identical assets, which,
in accordance with the fair value hierarchy
within IFRS 7 Financial Instruments:
Disclosure, represent Level 1 fair values.
Non-quoted equity investments are
carried at cost as they are unquoted equity
instruments that do not have a quoted
market price in an active market and whose
fair value cannot be reliably measured.
The Sukuk is a bond structured to conform
with the principles of Islamic Sharia law.
At 31 December 2014, the market value of
the investment in Sukuk was AED 194.0
million (2013: AED 196.8 million) which in
accordance with the fair value hierarchy
within IFRS 7 Financial Instruments:
Disclosure, represents Level 1 fair values.
16. Related party transactions
Transactions between the Corporation and
its subsidiaries, which are related parties,
have been eliminated on c‎ onsolidation and
are not disclosed in this note. Transactions
between the Group and its associates are
disclosed ‎below.‎
a)‎Federal Government and state
controlled entities
As stated in Note 1, in accordance with
Federal Law No. 267/10 for 2009, the Federal
Government of the UAE ‎transferred its 60%
holding in the Corporation to the Emirates
92
Annual Report 2014
Investment Authority with effect from 1
January 2008,
‎‎
which is ultimately controlled
by the UAE Federal Government. The Group
provides telecommunication s‎ ervices to the
Federal Government (including Ministries
and local bodies). These transactions are at
normal commercial terms. The credit period
allowed to Government customers ranges
from 90 to 120 days. Trade receivables
include an amount of AED 1,073 million
(2013: AED 1,041 million), which are net of
allowance for doubtful debts of AED 101
million (2013: AED 82 million), receivable
from ‎Federal Ministries and local bodies. See
Note 5 for disclosure of the royalty payable
to the Federal Government of t‎ he UAE.
In accordance with IAS 24 (revised 2009)
Related Party Disclosures the Group
has elected not to disclose t‎ransactions
with the UAE Federal Government and
other entities over which the Federal
Government exerts ‎
control, joint control
or significant influence. The nature of
the transactions that the Group has with
such related ‎
parties is the provision of
telecommunication services.‎
Etisalat
93
Financials
Emirates Telecommunications Corporation
Emirates Telecommunications Corporation
Notes to the consolidated financial statements for year ended 31 December 2014
Notes to the consolidated financial statements for year ended 31 December 2014
16. Related party transactions (continued)
18. Trade and other receivables
2014
AED’000
2013
AED’000
Amount receivable for services rendered
12,069,550
6,623,754
Allowance for doubtful debts
(4,333,450)
(1,550,560)
7,736,100
5,073,194
5,310,370
2,984,878
b)‎Joint ventures and associates
Associates
Joint Ventures
2014
AED millions
2013
AED millions
2014
AED millions
2013
AED millions
136.8
123.0
-
-
Amounts due from other telecommunication operators/carriers
99.6
105.0
-
-
Prepayments
666,822
506,203
Management and other services
272.9
234.5
7.3
-
Accrued income
954,840
499,734
Net amount due from related parties as at 31 December
451.5
670.2
8.4
13.6
Other receivables
3,512,245
2,145,220
At 31 December
18,180,377
11,209,229
Total trade and other receivables
18,180,377
11,209,229
17,376,549
10,613,248
803,828
595,981
2014
AED’000
2013
AED’000
8,905,884
4,640,536
622,006
538,219
Net trade receivables
Trading transactions
Telecommunication services – sales
Telecommunication services – purchases
Loans to related party
Loans due from related party as at 31 December
Sales to related parties comprise
management fees and the provision of
telecommunication products and services
‎‎(primarily voice traffic and leased circuits)
by the Group. Purchases relate exclusively
to the provision of ‎
telecommunication
products and services by associates to the
Group. T‎ he loans due from related party is
subordinated to external borrowings.
The principal management and other
services provided to the Group’s associates
are set out below:‎
i. Etihad Etisalat Company
Pursuant to the Communications and
Information Technology Commission’s
(CITC) licensing requirements, Mobily
‎‎(then under incorporation) entered into a
Short-term benefits
17. Inventories
2,390.2
2,390.2
-
-
management agreement (“the Agreement”)
with the Corporation as its ‎operator from 23
December 2004. Amounts invoiced by the
Corporation relate to annual management
fees, fees ‎for staff secondments and other
services provided under the Agreement.
The term of the Agreement is for a ‎period
of seven years and can be automatically
renewed for successive periods of five years
unless the ‎Corporation serves a 12 month
notice of termination or Mobily serves a 6
month notice of termination prior to the
‎expiry of the applicable period.‎
maintenance and support services. The
‎Corporation receives annual income from
Thuraya in respect of these services.‎
ii. Thuraya Telecommunications
Company PJSC
The remuneration of the Board of Directors,
who are the key management personnel of
the Group, is set out ‎below in aggregate
for the category specified in IAS 24 Related
Party Disclosures.‎‎
The Corporation provides a primary
gateway facility to Thuraya including
iii. Emerging Markets
Telecommunications Services B.V.
The Group’s normal credit terms ranges between 30 and 120 days (2013: 30 and 120 days).‎
Ageing of net trade receivables, including amounts due from other telecommunication operators/
carriers
Upto 60 days
c) Remuneration of key management
personnel
90-365 days
1,492,935
1,400,590
Over one year
2,025,645
1,478,727
13,046,470
8,058,072
2014
AED’000
2013
AED’000
1,550,560
1,555,738
109,513
(5,178)
2,687,329
-
(13,952)
-
4,333,450
1,550,560
2014
AED’000
2013
AED’000
17,272
35,141
61-90 days
Net trade receivables
Movement in allowance for doubtful debts
At 1 January
Net increase/ (decrease) in allowance for doubtful debts
Acquisition of Maroc Telecom (Note 30)
Reclassified as held for sale (Note 36)
2013
AED’000
Subscriber equipment
400,464
263,536
Maintenance and consumables
224,188
234,696
624,652
498,232
Annual Report 2014
of which non-current other receivables
Amounts invoiced by the Corporation
relate to annual management fees, fees
for staff secondments, interest on loan and
other s‎ ervices. ‎
2014
AED’000
94
of which current trade and other receivables
At 31 December
No interest is charged on the trade receivable
balances. With respect to the amounts
receivable from the services rendered the
‎ roup holds AED 299 million (2013: AED
G
266 million) of collateral in the form of cash
deposits from customers. ‎‎Amounts due from
other telecommunication operators/carriers
include interconnect balances with related
parties. ‎
Etisalat
95
Financials
Emirates Telecommunications Corporation
Emirates Telecommunications Corporation
Notes to the consolidated financial statements for year ended 31 December 2014
Notes to the consolidated financial statements for year ended 31 December 2014
19. Cash and cash equivalents
Maintained locally
Maintained overseas, unrestricted in use
Maintained overseas, restricted in use
Cash and cash equivalents
Reclassified as held for sale (Note 36)
Cash and cash equivalents from continued operations
2014
AED’000
2013
AED’000
15,924,323
13,834,412
2,335,947
1,448,825
291,504
167,011
18,551,774
15,450,248
(8,915)
-
18,542,859
15,450,248
21. Borrowings
The carrying value of the Group’s bank and other borrowings a‎ re as follows:‎
Fair Value
Carrying Value
2014
AED’000
2013
AED’000
2014
AED’000
2013
AED’000
Bank overdrafts
2,416,452
105,895
2,416,452
105,895
Bank loans
4,966,465
4,579,854
4,909,289
4,576,106
14,901,901
-
14,164,803
-
52,705
60,382
56,562
60,382
389,831
541,676
366,057
541,676
8,189
8,420
8,671
8,420
22,735,543
5,296,227
21,921,834
5,292,479
570,715
579,186
22,492,549
5,871,665
(263,379)
-
22,229,170
5,871,665
Bank borrowings
Other borrowings
Cash and cash equivalents comprise cash
and short-term bank deposits with an
original maturity of three months ‎or less.
These are denominated primarily in UAE
Dirham, with financial institutions and
banks. Interest is earned on these deposits
at prevailing market rates. The carrying
amount ‎
of these assets approximates to
their fair value.‎
Bonds
Loans from non controlling interest
Vendor financing
20. Trade and other payables
2014
AED’000
2013
AED’000
Current
Others
Advances from non controlling interest
Federal royalty
5,661,415
6,129,150
Total Borrowings
Trade payables
12,890,068
4,955,221
Reclassified as held for sale (Note 36)
3,558,866
2,472,950
Borrowings from continuing operations
1,810,399
1,487,470
of which due within 12 months
3,609,711
1,404,543
7,067,500
6,119,620
of which due after 12 months
18,619,459
4,467,122
30,988,248
21,164,411
Amounts due to other telecommunication administrations
Deferred revenue
Other payables and accruals
At 31 December
Non-current
Other payables and accruals
At 31 December
Amounts due to other telecommunication
administrations
include
interconnect
balances with related parties.
96
Annual Report 2014
Federal royalty for the year ended 31
December 2014 is to be paid as soon as
the consolidated financial statements have
1,075,480
828,565
1,075,480
828,565
been approved but not later than 4 months
from the year ended 31 December 2014.
The fair values of the Group’s borrowings
excluding bonds and advances from
investment partners are calculated using
present value techniques and represents
Level 2 fair values. Fair values of bonds
are calculated using quoted market prices
which represent Level 1 fair values.
Advances from non-controlling interests
represent advances paid by the minority
shareholder of Etisalat International
Pakistan LLC (EIP) towards the Group›s
acquisition of its 26% stake in PTCL, net
of repayments. The amount is interest free
and is not repayable within 12 months of
the statement of financial position date
and accordingly the full amount is carried
in non-current liabilities. The fair value of
advances is not equivalent to its carrying
value as it is interest-free. However, as the
repayment dates are variable, a fair value
cannot be reasonably determined.
External borrowings of AED 4,274 million
(2013: AED 4,563 million) are secured
by property, plant and equipment.
During the current year, one of the Group’s
subsidiaries has breached the covenants
on the external borrowings facility of
CFA 42,637 million (AED 290 million) .
The carrying value of the above facility as
at 31 December 2014 amounted to CFA
7,954 million (AED 54 million). The lender
has been notified regarding the breach.
The lender did not request for accelerated
repayment of the loan and the terms of
the loan were not rescheduled. The loan is
repayable within 12 months.
On 28 April 2014, the Group entered into
multi-currency facilities agreement for
EUR 3.15 billion (AED 15.9 billion) with a
syndicate of local and international banks
for the purpose of financing the Maroc
Telecom›s acquisition. Financing consisted
of two facilities: Tranche A was a twelve
months bridge loan amounting to EUR
2.1 billion (AED 10.6 billion) at a price of
Euribor plus 45 basis points for the first six
months increased by 15 basis points in each
of the following three months. Tranche B
was a three years term loan amounting to
EUR 1.05 billion (AED 5.3 billion) at a price
of Euribor plus 87 basis points. Both these
tranches have been settled in June 2014
following issuance of bonds as mentioned
in the next page.
Etisalat
97
Financials
Emirates Telecommunications Corporation
Emirates Telecommunications Corporation
Notes to the consolidated financial statements for year ended 31 December 2014
Notes to the consolidated financial statements for year ended 31 December 2014
21. Borrowings (continued)
21. Borrowings (continued)
On 22 May 2014, the Group has completed
the listing of USD 7 billion (AED 25.7 billion)
Global medium term note programme
which will be used to meet medium to
long-term funding requirements on the
Irish Stock Exchange (“ISE”). Under the
programme, Etisalat can issue one or more
series of conventional bonds in any currency
and amount up to USD 7 billion. The listed
programme was rated Aa3 by Moody›s, AAby Standard & Poor›s and A+ by Fitch.
programme. The issued bonds were
denominated in US Dollars and Euros and
consisted of four tranches:
On 11 June 2014, the Group issued
the inaugural bonds under the GMTN
d. 12 years tranche: EUR 1,200 million
with coupon rate of 2.750% per annum
a. 5 years tranche: USD 500 million with
coupon rate of 2.375% per annum
b. 7 years tranche: EUR 1,200 million with
coupon rate of 1.750% per annum
c. 10 years tranche: USD 500 million with
coupon rate of 3.500% per annum
The effective date for the bonds term
was 18 June 2014. Net proceeds from
the issuance of the bonds were used for
repayment of outstanding facilities of
EUR 3.15 billion, as above, utilized for the
acquisition of Maroc Telecom.
As at 31 December 2014, the total amounts
in issue under this programme split by
currency are USD 1.0 billion (AED 3.674
billion) and Euro 2.4 billion (AED 10.7
billion) as follows:
The terms and conditions of the Group’s bank and other borrowings are as follows:‎‎
Carrying Value
Year of
maturity
Currency
Nominal
interest rate
2014
AED’000
2013
AED’000
Secured bank loan
2014-2016
EGP
Mid Corridor +1.4%
1,207,849
1,345,355
Secured bank loan
2014-2017
EURO
EURIBOR +0.8%
334,650
504,520
Secured bank loan
2014-2015
USD
LIBOR +2.9%
-
367,798
Secured bank loan
2014
USD
LIBOR +4.8%
263,379
351,002
Unsecured bank loan
2016-2018
USD
LIBOR +1.3%
29,316
33,155
Variable interest borrowings
Nominal Value
Fair
Value
Carrying
Value
Secured bank loan
2014-2020
USD
LIBOR + 1.6%
206,176
-
2014
AED’000
2014
AED’000
2014
AED’000
Secured bank loan
2014-2015
EURO
EURIBOR +4.9%
54,107
137,189
Secured bank loan
2014-2019
PKR
KIBOR + 70 BP
109,800
-
Secured bank loan
2014-2019
PKR
KIBOR + 80 BP
329,400
-
Bonds
2.375% US dollar 500 million notes due 2019
1,837,000
1,841,225
1,824,285
Secured bank loan
2014-2019
USD
6 month LIBOR +.1.52%
720,972
-
3.500% US dollar 500 million notes due 2024
1,837,000
1,879,618
1,812,709
Secured bank loan
2014-2019
PKR
KIBOR + 50 BP
109,800
-
Secured bank loan
2014-2019
EUR
6 month
EURIBOR+.1.4%
545,749
685,669
Secured bank loan
2014-2016
USD
3 months LIBOR+3.5%
19,099
-
Secured bank loan
2014-2019
LKR
3 months SLIBOR+4%
64,256
-
Secured bank loan
2015-2020
USD
KIBOR+0.2%
-
661,232
Secured bank loan
2014-2019
USD
KIBOR+0.2%
-
271,273
Secured vendor financing
2014-2014
USD
5.0%
-
74,795
Unsecured bank overdrafts
2014-2015
MAD
3.8%
2,080,295
-
Secured bank loan
2014-2017
CFA
8.0%
44,791
65,803
Unsecured loans from non-controlling interests
2014-2015
EGP
10.0%
56,562
60,382
N/A
USD
Interest free
570,715
579,186
2014-2015
PKR
Interest free
-
296,375
Bonds
2019
USD
2.5%
1,824,285
-
Bonds
2024
USD
3.7%
1,812,710
-
Bonds
2021
EUR
2.0%
5,283,174
-
Bonds
2016
EUR
2.8%
5,244,633
-
Others
Various
Various
Various
1,580,831
437,931
22,492,549
5,871,665
(263,379)
-
22,229,170
5,871,665
Bonds in net investment hedge relationship
1.750% Euro 1,200 million notes due 2021
5,354,400
5,495,221
5,283,174
2.750% Euro 1,200 million notes due 2026
5,354,400
5,685,837
5,244,635
14,382,800
14,901,901
14,164,803
At 31 December 2014
of which due within 12 months
of which due after 12 months
14,164,803
Fixed interest borrowings
Other borrowings
Advances from non-controlling interests
Unsecured vendor financing
Total Borrowings
Reclassified as held for sale (Note 36)
Borrowings from continuing operations
98
Annual Report 2014
Etisalat
99
Financials
Emirates Telecommunications Corporation
Emirates Telecommunications Corporation
Notes to the consolidated financial statements for year ended 31 December 2014
Notes to the consolidated financial statements for year ended 31 December 2014
21. Borrowings (continued)
23. Payables related to investments and licenses
Current
AED’000
Non-current
AED’000
Total
AED’000
2,936,653
-
2,936,653
11,022
-
11,022
Republic of Benin
24,828
-
24,828
Pakistan Telecommunication Company Limited
161,291
936,699
1,097,990
3,133,794
936,699
4,070,493
2,936,653
-
2,936,653
11,022
-
11,022
14,179
65,476
79,655
1,769
3,275
5,044
2,963,623
68,751
3,032,374
a)‎Interest rates
The weighted average interest rate paid during the year on bank and other borrowings is set out below:‎
At 31 December 2014
2014
2013
Bank borrowings
5.1%
5.4%
Etisalat International Pakistan LLC
Other borrowings
2.9%
4.9%
Atlantique Telecom S.A.
Licenses
b)‎Available facilities ‎
At 31 December 2014, the Group had AED 2,000 million (2013: AED 1,966 million) of undrawn committed b
‎ orrowing facilities in respect
of which all conditions precedent had been met.‎
At 31 December 2013
22. Net investment hedge relationships
During the year, Euro bonds issued (refer to note 21) and cross currency swaps have been designated as net investment hedges. There
was no material ineffectiveness of these hedges recorded as of the reporting date.
2014
AED’000
Effective part directly recognised in other comprehensive income
1,301,869
During the year, the Group has entered into cross currency USD-EUR swaps which are designated as hedges of net investment. The fair
value of the cross currency swaps are calculated by discounting the future cash flows to net present value using appropriate market
interest and prevailing foreign currency rates. The fair value of swaps is as follows:
2014
AED’000
Fair value of swaps designated as net investment hedge
The fair value of bonds designated as hedge is disclosed in note 21.
Investments
293,584
Investments
Etisalat International Pakistan LLC
Atlantique Telecom S.A.
Licenses
Republic of Benin
Pakistan Telecommunication Company Limited
According to the terms of the share purchase
agreement between Etisalat International
Pakistan LLC and the ‎
Government of
Pakistan (“GOP”) payments of AED 6,612
million (2013: AED 6,612 million) have
been made to GOP ‎with the balance of AED
2,937 million (2013: AED 2,937 million) to
be paid. The amounts payable are being
withheld pending completion of certain
‎
conditions in the share purchase agreement
related to the transfer of c‎ ertain assets to
PTCL.‎
All amounts payable on acquisitions are
financial liabilities measured at amortised
cost and are mostly d
‎ enominated in either
USD, AED or PKR.
24. Finance lease obligations
Minimum lease payments
Present value of minimum lease
payments
2014
AED’000
2013
AED’000
2014
AED’000
2013
AED’000
7,150
2,724
6,983
2,564
18,182
4,012
17,283
2,460
25,332
6,736
24,266
5,024
(1,066)
(1,711)
-
-
24,266
5,025
24,266
5,024
of which due within 12 months
6,983
2,565
6,983
2,564
of which due after 12 months
17,283
2,460
17,283
2,460
Amounts payable under finance lease
Within one year
Between 2 and 5 years
Less: future finance charges
Present value of lease obligations
It is the Group policy to lease certain
of its plant and machinery under
finance leases. For the year ended 31
100
Annual Report 2014
‎ ecember 2014, the average effective
D
borrowing rate was 25% (2013:
20.8%). The fair value of the Group’s
lease ‎
o bligations is approximately
equal to their carrying value.‎‎
Etisalat
101
Financials
Emirates Telecommunications Corporation
Emirates Telecommunications Corporation
Notes to the consolidated financial statements for year ended 31 December 2014
Notes to the consolidated financial statements for year ended 31 December 2014
25. Provisions
26. Financial instruments
Asset retirement
obligations
AED’000
Other
AED’000
Total
AED’000
33,677
779,863
813,540
2,719
1,001,252
1,003,971
-
(208,067)
(208,067)
(16,167)
(184,150)
(200,317)
-
(5,890)
(5,890)
Unwinding of discount
(162)
-
(162)
Exchange differences
(346)
(29,354)
(29,700)
19,721
1,353,654
1,373,375
At 1 January 2013
Additional provision during the year
Utilization of provision
Release of provision
Reclassification
At 31 December 2013
Included in current liabilities
1,172,286
Included in non-current liabilities
201,089
At 31 December 2013
19,721
Additional provision during the year
1,353,654
1,373,375
20,718
737,070
757,788
-
197,061
197,061
(6)
(46,511)
(46,517)
(6,025)
(243,774)
(249,799)
(549)
(1,188)
(1,737)
Unwinding of discount
673
-
673
Exchange differences
(426)
(41,116)
(41,542)
34,106
1,955,196
1,989,302
Included in current liabilities
-
-
1,862,566
Included in non-current liabilities
-
-
126,736
34,106
1,955,196
1,989,302
Acquisition of Maroc Telecom (Note 30)
Utilization of provision
Release of provision
Adjustment for change in discount rate
At 31 December 2014
At 31 December 2014
Asset retirement obligations relate to
certain assets held by certain Group’s
overseas subsidiaries that will require
‎restoration at a future date that has been
approximated to be equal to the end of the
useful economic life of the ‎assets. There
are no expected reimbursements for these
amounts. ‎
“Other” includes provisions relating to
‎
certain indirect tax liabilities and other
regulatory related items, including
provisions relating to c‎ertain Group’s
overseas subsidiaries.‎
Details of the significant accounting
policies
and
methods
adopted
(including the criteria for recognition,
the basis ‎
o f measurement and the
bases of recognition of income and
expenses) for each class of financial
asset and ‎
f inancial
disclosed in Note 2.
‎
liability
are
Capital management
The Group’s capital structure is as follows:‎
Bank borrowings
Bonds
Other borrowings
Finance lease obligations
Cash and cash equivalents
Net funds
2014
AED’000
2013
AED’000
(7,325,741)
(4,682,001)
(14,164,803)
-
(1,002,005)
(1,189,664)
(24,266)
(5,024)
18,542,859
15,450,248
(3,973,956)
9,573,559
Total equity
60,926,871
49,592,696
Net equity
64,900,827
40,019,137
The capital structure of the Group consists
of bonds, bank and other borrowings,
finance lease obligations, cash and cash
equivalents and total equity comprising
‎
share capital, reserves and retained
earnings.‎
The Group monitors the balance between
equity and debt financing and establishes
internal limits on the m
‎ aximum amount
of debt relative to earnings. The limits are
assessed, and revised as deemed appropriate,
based o
‎n various considerations including
the anticipated funding requirements of the
Group and the weighted average ‎
cost of
capital. The overall objective is to maximise
returns to its shareholders and benefits for
other stakeholders and to maintain an optimal
capital structure to reduce the cost of capital.‎
Categories of financial instruments
The Group’s financial assets and liabilities consist of the following:‎
2014
AED’000
2013
AED’000
2,850,049
3,074,027
Financial assets
Loans and receivables, held at amortised cost:
Loans to/due from associates and joint ventures
Trade and other receivables, excluding prepayments
Available-for-sale financial assets (including other investments held for sale)
17,513,554
10,703,026
20,363,603
13,777,053
747,381
1,119,847
Fair value through Profit or loss
44,625
-
Held-to-maturity investments
191,991
195,585
18,542,859
15,450,248
293,584
-
40,184,043
30,542,733
Trade and other payables, excluding deferred revenue
30,253,329
20,505,506
Borrowings
22,492,549
5,871,665
4,070,493
3,032,374
Cash and cash equivalents
Derivative financial instruments
Financial liabilities
Other financial liabilities held at amortised cost:
Payables related to investments and licenses
Finance lease obligations
102
Annual Report 2014
24,266
5,024
56,840,637
29,414,569
Etisalat
103
Financials
Emirates Telecommunications Corporation
Emirates Telecommunications Corporation
Notes to the consolidated financial statements for year ended 31 December 2014
Notes to the consolidated financial statements for year ended 31 December 2014
26. Financial instruments (continued)
26. Financial instruments (continued)
Financial risk management
objectives‎
r‎isks or the manner in which it manages
and measures the risk during the year.‎
The Group’s corporate finance function
monitors the domestic and international
‎financial markets relevant to managing the
financial risks relating to the operations
of the Group. Any significant decisions
‎about whether to invest, borrow funds or
purchase derivative financial instruments
are approved by either the B
‎oard of
Directors or the relevant authority of
either the Corporation or of the individual
subsidiary. The Group’s ‎risk includes market
risk, credit risk and liquidity risk.‎
Foreign currency risk
The Group takes into consideration several
factors when determining its capital structure,
with the aim of ensuring s‎ustainability of
the business and maximizing the value to
shareholders. The Group monitors its cost
of capital ‎
with a goal of optimizing its
capital structure. In order to do this, the
Group monitors the financial markets and
‎updates to standard industry approaches for
calculating weighted average cost of capital,
or WACC. The Group also m
‎ onitors a net
financial debt ratio to obtain and maintain
the desired credit rating over the medium
term, and with ‎which the Group can match
the potential cash flow generation with
the alternative uses that could arise at all
times. ‎These general principles are refined by
other considerations and the application of
specific variables, such as ‎country risk in the
broadest sense, or the volatility in cash flow
generation, or the applicable tax rules, when
‎determining the Group’s financial structure.‎
a) Market risk
The Group’s activities expose it primarily
to the financial risks of changes in foreign
currency exchange rates, ‎interest rates and
price risks on equity investments. From
time to time, the Group will use derivative
financial i‎nstruments to hedge its exposure
to currency risk. There has been no material
change to the Group’s exposure to market
The
Group’s
presentation/functional
currency is United Arab Emirates Dirham
(“AED”). Foreign currency risk arises from
transactions denominated in foreign
currencies and net investments in foreign
operations.
The Group has foreign currency
transactional exposure to exchange rate
risk as it enters into contracts in other
than the ‎functional currency of the entity
(mainly USD and Euro). The Group entities
also enter into contract in the functional
currencies including Nigerian Naira,
Egyptian Pounds, Pakistani R
‎upee, Sri
Lankan Rupee, Afghani, Tanzanian Shilling
CFA Francs and Moroccan Dirham. Etisalat
UAE also enters into contracts in USD which
is pegged to AED. Atlantique Telecom
Group enters into Euros contracts as CFA
is pegged to Euro and Maroc Telecom also
enters into Euro contracts as Moroccan
Dirham is 80% pegged to Euro. The Group
enters into a variety of derivative financial
instruments to manage its exposure to
interest rate and foreign exchange rate
risk, including forward foreign exchange
contracts, interest rate swaps and cross
currency swaps.
In addition to transactional foreign
currency exposure, a foreign currency
exposure arises from net investments in
Group entities whose functional currency
differs from the Group’s presentation
currency (AED). The risk is defined as the
risk of fluctuation in spot exchange rates
between the functional currency of the net
investments and the Group’s presentation
currency. This will cause the amount of the
net investment to vary. Such a risk may
have a significant impact on the Group’s
consolidated financial statements.
This translation risk does not give rise to a
cash flow exposure. Its impact arises only
from the translation of the net investment
into the group’s presentation currency.
This procedure is required in preparing the
Group’s consolidated financial statements
as per the applicable IFRS.
The cross currency swaps involve the
exchange of principal and floating or fixed
interest receipts in the foreign currency in
which the issued bonds are denominated,
for principal and floating or fixed interest
payments in the Group’s functional
currency. The fair value of a cross currency
is determined using standard methods
to value cross currency swaps and is the
estimated amount that the swap contract
can be exchanged for or settled with
under normal market conditions. The key
inputs are the yield curves, basis curves
and foreign exchange rates. In accordance
with the fair value hierarchy within IFRS 7
Financial Instruments: Disclosure, the fair
value of cross currency swaps represent
Level 2 fair values.
Foreign currency sensitivity
The following table presents the Group’s
sensitivity to a 10 per cent change in the
Dirham against the Egyptian ‎Pound, the
Euro, the Pakistani Rupees and Marccon
dirham. These four currencies account for
a significant portion of the impact of n
‎ et
profit, which is considered to materially
occur through
cash and borrowings
within the Group’s financial s‎tatements
in respect of subsidiaries and associates
whose functional currency is not the
Dirham. The impact has b‎ een determined
by assuming a weakening in the foreign
currency exchange of 10% upon closing
foreign ‎exchange rates. A positive number
indicates an increase in the net cash and
borrowings balance if the AED/USD ‎were to
strengthen against the foreign currency.
2014
AED’000
2013
AED’000
112,074
108,489
1,164,144
52,808
12,187
7,569
156,556
-
Increase in profit/(loss) and increase/(decrease) in equity
Egyptian pounds
Euros
Pakistani rupees
MAD
104
Annual Report 2014
Interest rate risk
The Group is exposed to interest rate risk
as entities in the Group borrow funds at
both fixed and floating interest r‎ates. The
Group monitors the market interest rates in
comparison to its current borrowing rates
and determines ‎whether or not it believes
it should take action related to the current
interest rates. This includes a consideration
of the current cost of borrowing, the
‎
projected future interest rates, the cost
and availability of derivate financial
‎instruments that could be used to alter
the nature of the interest and the term of
the debt and, if applicable, the p‎ eriod for
which the interest rate is currently fixed.‎
Interest rate sensitivity
Based on the borrowings outstanding at
31 December 2014, if interest rates had
been 2% higher or lower during t‎he year
and all other variables were held constant,
the Group’s net profit and equity would
have decreased or ‎
increased by AED 87
million (2013: AED 91 million). This impact
is primarily attributable to the Group’s
exposure to i‎nterest rates on its variable
rate borrowings. ‎
The Group’s sensitivity to interest rate has
reduced significantly during the year due
to the fixed coupon bonds issued in June
2014.
Other price risk
The Group is exposed to equity price risks
arising from its equity investments. Equity
investments are held for s‎trategic rather
than trading purposes. The Group does not
actively trade these investments. See Note
15 for ‎further details on the carrying value
of these investments.‎
If equity price had been 5% higher or
lower:
• profit for the year ended 31 December
2014 would increase/decrease by AED
15 million (2013: nil) due to profit
realised on disposal of investments in
available-for-sale shares
• other comprehensive income for the
year ended 31 December 2014 would
increase/decrease by AED 28 million
(2013: increase/decrease by AED 67
million) as a result of the changes in
fair value of available-for-sale shares.
b) Credit risk management
Credit risk refers to the risk that the
counterparty will default on its contractual
obligations resulting in financial ‎
loss to
the Group and arises principally from
the Group’s bank balances and trade and
other receivables. The Group ‎has adopted
a policy of only dealing with creditworthy
counterparties and obtaining sufficient
collateral, where ‎appropriate, as a means
of mitigating the risk of financial loss
from defaults. The Group’s exposure and
the credit ‎
ratings of its counterparties
are monitored and the aggregate value of
transactions concluded is spread amongst
‎approved counterparties.‎
For its surplus cash investments, the Group
considers various factors in determining
with which banks and /corporate to invest
its money i‎ncluding but not limited to the
financial health, Government ownership
(if any), the rating of the bank by rating
‎agencies The assessment of the banks and
‎the amount to be invested in each bank
is assessed annually or when there are
significant changes in the ‎marketplace.‎
Group’s bank balance
2014
2013
Investment in UAE
86%
99%
Investment outside of the UAE
14%
1%
Bank rating for Investment in UAE
2014
By Fitch
By Standard and P
‎ oor›s
The Group’s trade receivables consist of a
large number of customers, spread across
diverse industries and ‎geographical areas.
Ongoing credit evaluation is performed
on the financial condition of accounts
receivable and, ‎
where appropriate,
collateral is received from customers
usually in the form of a cash deposit.‎
The carrying amount of financial assets
recorded in the consolidated financial
statements, net of any allowances ‎for losses,
represents the Group’s maximum exposure
2013
AED
Rating
AED
Rating
7.0 billion
A+
5.9 billion
A+
1.7 billion
A
1.6 billion
A
-
NA
1.5 billion
A
to credit risk without taking account of the
value of any c‎ ollateral obtained.‎
c) Liquidity risk management
Ultimate responsibility for liquidity risk
management rests with the Board of
Directors, which has built an ‎
appropriate
liquidity risk management framework for
the management of the Group’s short,
medium and long-term ‎
funding and
liquidity management requirements. The
Group manages liquidity risk by maintaining
adequate ‎
reserves, banking facilities and
reserve borrowing facilities by continuously
monitoring forecast and actual cash fl
‎ ows
and matching the maturity profiles of
financial assets and liabilities. The details
of the available undrawn ‎facilities that the
Group has at its disposal at 31 December
2014 to further reduce liquidity risk is
included in Note ‎‎21. The majority of the
Group’s financial liabilities as detailed in the
consolidated statement of financial position
are ‎due within one year.
Etisalat
105
Financials
Emirates Telecommunications Corporation
Emirates Telecommunications Corporation
Notes to the consolidated financial statements for year ended 31 December 2014
Notes to the consolidated financial statements for year ended 31 December 2014
26. Financial instruments (continued)
27. Provision for end of service benefits (continued)
Financial liabilities are repayable as follows:
The movement in defined benefit obligations for funded and unfunded plans is as follows:
Borrowings
Payables
related to
investments
and licenses
Finance
lease
obligations
Total
29,389,497
3,952,158
3,133,794
6,983
36,482,432
1,075,533
1,034,817
936,699
17,283
3,064,332
12,451
4,881,624
-
-
4,894,075
336
12,623,950
-
-
12,624,286
30,477,817
22,492,549
4,070,493
24,266
57,065,125
19,663,755
1,404,543
2,963,623
2,564
24,034,485
1,012,431
1,112,335
68,751
2,460
2,195,977
In the third to fifth years inclusive
15,520
2,999,402
3,014,922
After the fifth year
33,799
355,385
389,184
20,725,505
5,871,665
AED’000
On demand or within one year
Trade and
other payables,
excluding
deferred revenue
In the second year
In the third to fifth years inclusive
After the fifth year
As At 31 December 2014
2014
AED’000
2013
AED’000
4,467,509
4,376,946
162,946
-
Reclassified as held for sale (Note 36)
(2,276)
-
Service cost
146,761
132,541
Interest cost
447,896
382,308
11,754
4,712
210,071
208,290
(706,363)
(344,296)
233,420
-
Exchange difference
162,212
(292,992)
As at 31 December
5,133,930
4,467,509
2014
AED’000
2013
AED’000
2,555,736
2,390,283
Return on plan assets
318,868
268,676
Contributions received
458,295
308,449
(371,355)
(214,939)
Exchange difference
127,846
(196,733)
As at 31 December
3,089,390
2,555,736
2014
AED’000
2013
AED’000
Service cost
146,766
132,419
Interest cost
54,911
130,075
Others
10,739
3,715
212,416
266,209
2014
AED’000
2013
AED’000
2.80%
3.07%
Pakistan
11.25%- 12.5%
11% - 12.5%
Morocco
4%
-
4.0%
4.0%
Pakistan
7% - 11.5%
7% - 11.5%
Morocco
3%-5%
-
As at 1 January
Acquisition of Maroc Telecom (Note 30)
Actuarial gain
Remeasurements
Benefits paid
Gain and loss on settlement
On demand or within one year
In the second year
As At 31 December 2013
3,032,374
5,024
The movement in the fair value of plan assets is as follows:
29,634,568
As at 1 January
The above table has been drawn up based
on the undiscounted cash flows of financial
liabilities based on the ‎earliest date on which
the Group can be required to pay. The table
includes both interest and principal cash flows.‎
Fair value of financial instruments
Borrowings are measured and recorded in
the consolidated statement of financial
position at amortised cost and t‎heir fair
values are disclosed in Note 21. The carrying
amounts of the other financial assets and
liabilities recorded ‎
in the consolidated
financial statements approximate their
fair values.
27. Provision for end of service benefits
The liabilities recognised in the consolidated statement of financial position are:‎
The amount recognised in statement of profit or loss is as follows:‎
2014
AED’000
2013
AED’000
3,541,336
3,025,327
(3,089,390)
(2,555,736)
451,946
469,591
Funded Plans
Present value of defined benefit obligations
Less: Fair value of plan assets
Following are the significant assumptions used relating to the major plans
Unfunded Plans
Present value of defined benefit obligations and other employee benefits
Total
Benefits paid
1,592,594
1,442,182
2,044,540
1,911,773
Discount rate
UAE
Average annual rate of salary
UAE
106
Annual Report 2014
Etisalat
107
Financials
Emirates Telecommunications Corporation
Emirates Telecommunications Corporation
Notes to the consolidated financial statements for year ended 31 December 2014
Notes to the consolidated financial statements for year ended 31 December 2014
27. Provision for end of service benefits (continued)
29. Reserves (continued)
Plan assets for funded plan are comprised as follows:
2014
AED’000
2013
AED’000
2,469,808
1,922,083
Cash and cash equivalents
477,771
393,635
As at 1 January
Investment property
292,957
250,206
Total comprehensive income for the year
Fixed assets
175
170
Other assets
4,555
5,092
(155,876)
(15,450)
3,089,390
2,555,736
Debt instruments - unquoted
less: liabilities
The expense recognised in profit or loss relating to contribution plan at the rate specified in the rules of the plans amounting to
AED 124 million (2013: AED 123 million).
The movement for each type of reserves is provided below:
2014
AED’000
2013
AED’000
(2,209,881)
(1,100,345)
(1,112,621)
(1,109,536)
(3,322,502)
(2,209,881)
As at 1 January
204,477
80,108
Loss on revaluation
(34,904)
(139,940)
(284,991)
264,309
(115,418)
204,477
7,850,000
7,850,000
8,166,000
8,108,000
-
58,000
8,166,000
8,166,000
165,077
97,561
24,580
67,516
189,657
165,077
14,091,307
14,080,515
(6,340)
10,792
14,084,967
14,091,307
Translation reserve
As at 31 December
Investment revaluation reserve
Reclassification adjustment relating to available-for-sale financial assets (disposed)/impaired during
the year
As at 31 December
28. Share capital
2014
AED’000
2013
AED’000
8,000,000
8,000,000
Authorised:
Development reserve
As at 1 January and 31 December
8,000 million (2013: 8,000 million) ordinary shares of AED 1 each
Asset replacement reserve
Issued and fully paid up:
As at 1 January
7,906.1 million (2013: 7,906.1 million) ordinary shares of AED 1 each
7,906,140
7,906,140
Transfer from retained earnings
As at 31 December
The Board of Directors in their meeting held
on 25 February 2015 proposed an increase
in the authorized share capital of the
Corporation to AED 10,000 million. This is
subject to the approval of the shareholders
in the extraordinary general assembly
meeting to be held on 24 March 2015.
The Board of Directors also proposed the
issue of bonus shares in the ratio of 1 share
for every 10 registered shares held by the
shareholders of the Corporation. This is also
subject to the approval of the shareholders
in the annual general assembly meeting to
be held on 24 March 2015.
Statutory reserve
As at 1 January
Transfer from retained earnings
As at 31 December
29. Reserves
The movement in the Reserves is provided below:
As at 1 January
Total comprehensive income for the year
Transfer from retained earnings
As at 31 December
108
Annual Report 2014
2014
AED’000
2013
AED’000
28,266,980
29,115,839
(1,432,516)
(985,167)
18,240
136,308
26,852,704
28,266,980
General reserve
As at 1 January
Transfer from retained earnings
As at 31 December
Etisalat
109
Financials
Emirates Telecommunications Corporation
Emirates Telecommunications Corporation
Notes to the consolidated financial statements for year ended 31 December 2014
Notes to the consolidated financial statements for year ended 31 December 2014
29. Reserves (continued)
30. Acquisition of Maroc Telecom (continued)
a)‎Development reserve, asset
replacement reserve and general
reserve ‎
These reserves are all distributable reserves
and comprise amounts transferred from
unappropriated profit at the d‎iscretion
of the Group to hold reserve amounts for
future activities including the issuance of
bonus shares.‎
b)‎Statutory reserve
In accordance with the UAE Federal
Law No. 8 of 1984, as amended, and the
respective Memoranda of Association ‎
of
some of the Group’s subsidiaries, 10% of
their respective annual profits should be
transferred to a non-‎distributable statutory
reserve. The Corporation’s share of the
reserve has accordingly been disclosed in the
‎consolidated statement of changes in equity.‎
c)‎Translation reserve
Cumulative foreign exchange differences
arising on the translation of overseas
operations are taken to the t‎ ranslation reserve.
d)‎Investment revaluation reserve
The cumulative difference between the
cost and carrying value of availablefor-sale financial assets is recorded in
the Investment revaluation reserve.‎The
‎
balance at 31 December 2014 includes
AED 28 million (2013 AED 259 million)
being the cumulative gain recognised in
other comprehensive income relating to
quoted investment which is classified as
held for sale.
On 4 November 2013, the Group
signed a share purchase agreement
for the acquisition of Vivendi›s stake
in Maroc Telecom. The acquition is in
line with the group›s strategy to reach
out to new customers and markets.
On 28 April 2014, the Group entered into
a multi-currency facilities agreement with
a syndicate of local and international
banks for the purpose of financing the
acquisition.
Fair values based on
purchase price allocation
AED’000
Intangible assets
10,729,232
Property, plant and equipment
14,886,958
Investments
Inventory
4,303,344
46,955
Cash and cash equivalents
On 14 May 2014, the Group completed
the acquisition at a net adjusted price of
EUR 4.1 billion (AED 20.9 billion) which
was primarily financed through external
borrowings. This amount included the cash
value of the 2012 dividend, amounting
to EUR 0.3 billion (AED 1.5 billion). The
transaction was effected through the
acquisition by Etisalat International North
Africa LLC (“EINA”) of Vivendi’s 100%
shareholding in Société de Participation
dans les Télécommunications (“SPT”)
established in the Kingdom of Morocco,
which directly holds 53% of the shares in
Maroc Telecom. The effective interests in
the capital of EINA are Etisalat (91.33%)
and Abu Dhabi Fund for Development
(8.67%).
The application of acquisition accounting
under IFRS 3 requires that the total
purchase price to be allocated to the ‎fair
value of the assets acquired and liabilities
assumed based on their fair values at the
2,261,948
acquisition date, with ‎amount exceeding
the fair values being recorded as goodwill.
Accordingly, on 14th May 2014, the assets
and liabilities of Maroc Telecom have ‎been
appraised, based on third party valuations,
for inclusion in the consolidated statement
of financial position.
Trade and other payables
Bank loans
(2,543,565)
The purchase price allocation process
(PPA) requires an analysis of acquired fixed
assets, licenses, customer r‎elationships,
brands, contractual commitments and
contingencies to identify and record the fair
values of all ‎assets acquired and liabilities
assumed. In valuing acquired assets and
liabilities assumed, fair values were based
on but not limited to: future expected
‎
discounted cash flows for customer
relationships, current replacement cost
‎for similar capacity and obsolescence for
certain fixed assets, comparable market
rates for real estate and ‎
appropriate
discount rates and growth rates.‎
Deferred tax liabilities
(3,637,635)
Net identifiable assets acquired
17,321,184
Non-controlling interests in the acquiree
(8,159,944)
(8,664,357)
Provision for end of service benefits
(162,946)
Provision
(197,061)
Obligations under finance leases
(22,450)
Goodwill
11,761,694
Fair value of investment
20,922,933
Net cash inflow arising on acquisition:
2,261,948
Cash and cash equivalents acquired
Included in the profit for the year is AED
796 million attributable to the business
generated by Maroc Telecom Group.
Revenue for the year includes AED 7,934
million in respect of Maroc Telecom. Had
this business combination been effected at
1 January 2014, the revenue of the Group
would have been AED 53,084 million and
the profit for the year would have been
AED 9,965 million.
Following the acquisition in May 2014,
the Group has received a dividend of AED
Annual Report 2014
191,419
Deferred tax assets
The receivable acquired in these transaction
are treated at their fair value and have a
gross contractual amount of AED 5,167
million. Their best estimate at acquition
date of the contractual cash flows not
expected to be collected are amounting to
AED 2,777 million.
110
129,342
Trade and other receivables
30. Acquisition of Maroc Telecom
On 22 July 2013, the Group made a binding
offer for Vivendi›s 53 percent stake in Maroc
Telecom, amounting to consideration of
EUR 3.9 billion (at that time equivalent
to AED 19.3 billion). This consideration
did not include the dividend received by
Vivendi from Maroc Telecom in respect of
the 2012 financial year, equivalent to MAD
7.40 per share, which would be for the
benefit of the Group. At closing, the Group
would pay Vivendi the cash value of 2012
dividend of EUR 0.3 billion (AED 1.5 billion).
The following table summarises the fair values of the assets acquired, liabilities assumed, r‎ elated deferred taxes and goodwill as of the
acquisition date further to the purchase price allocation process (PPA).
1,249.1 million (MAD 2,795.6 million) from
Maroc Telecom relating to the year 2013.
Limited competition of the fixed line
business in North and Western Africa; and
Goodwill resulting from the acquisition
has been assigned to Maroc Telecom and
Maroc Telecom›s international subsidiaries
as a CGU. Acquisition accounting allows
‎for recognition of deferred tax liabilities on
acquired intangibles (other than goodwill)
which is expected to be ‎reflected as a tax
benefit on Group’s future consolidated
statement of profit or loss in proportion
to and over t‎he amortization period of
the related intangible asset. There is no
deferred tax liability recorded for fair value
‎adjustment relating to land as this is not
depreciated.
Long-term ability to retain mobile
customers and maintain market share
in its key markets;
Goodwill arose in the acquisition of
Maroc Telecom because the cost of the
combination included:
Ability to participate in the consolidation
of telecommunications industry in North
Africa and Western Africa; and
Trained and skilled workforce.
These benefits are not recognised separately
from Goodwill because that do not
meet recognition criteria for identifiable
intangible assets.
Acquisition related costs amounting to AED
621 million (Note 7) have been excluded
from the consideration transferred and
have been recognised as an expense in
profit and loss of the current year.
Etisalat
111
Financials
Emirates Telecommunications Corporation
Emirates Telecommunications Corporation
Notes to the consolidated financial statements for year ended 31 December 2014
Notes to the consolidated financial statements for year ended 31 December 2014
31. Significant events
33. Contingent liabilities
On 22 February 2012, the Supreme Court
of India cancelled all of Etisalat DB Telecom
Private Limited›s (the Company) licenses,
removing the Company›s ability to operate
its current mobile telecommunications
business. Following the cancellation, the
Board of the Company unanimously agreed
to shut down its telecommunications
network and gave the appropriate notices
to the Indian authorities. Furthermore, the
resignation of the directors of the Company
appointed by the majority shareholders
without replacement adversely affected the
ability of the Company›s Board of Directors
to take decisions. Subsequently, Etisalat
Mauritius Limited (which is wholly owned
by Etisalat) filed proceedings on 12 March
2012 for the just and equitable winding up
of the Company (the Company Petition).
The Company Petition was admitted by the
Company Court by its judgment dated 18
November 2013. However, the decision
was appealed to the Appeal Court by one of
the Company’s shareholders but dismissed
by an order dated 8 April 2014. The decision
of the Appeal Court was further appealed
to the Supreme Court but finally dismissed
by an order dated 14 July 2014.
The final arguments in the Company Petition
have been heard by the Company Court and
orders remain reserved, at the consolidated
statement of financial position date.
32. Commitments
a) Capital commitments
The Group has approved future capital projects and investments commitments to the extent of AED 9,377 million ‎‎(2013: AED 5,448
million).‎
b) Lease commitments
i) The Group as lessee
Minimum lease payments under operating leases recognised as an expense in the year (Note 5)
2014
AED’000
2013
AED’000
227,777
258,458
At the end of the reporting period, the Group had outstanding commitments for future minimum lease payments under non-‎cancellable
operating leases, which fall due as follows:‎
Within one year
Between 2 to 5 years
After 5 years
2014
AED’000
2013
AED’000
272,814
275,839
1,040,687
1,330,078
1,159,391
722,640
2,472,892
2,328,557
Operating lease payments represent rentals payable by the Group for certain of its office and retail properties. ‎Leases are negotiated
for an average term of two years.‎
ii) The Group as lessor
a) Bank guarantees
2014
AED million
2013
AED million
949.0
527.0
Corporation Overseas investments
771.3
393.0
ii) Promissory notes and letter of credit
39.4
228.0
i) Performance bonds and guarantees in relation to contracts
b)‎Foreign exchange regulations
On 23 July 2011, Etisalat DB Telecom Pvt
Limited (the Company) received a show cause
notice from the Enforcement Directorate
(the ED) of India alleging certain breaches
of the Foreign Exchange Management
Act 1999 (FEMA), by the Company and its
Directors. The Company and its Directors
have filed their response(s) to the notice and
the cases of each of the notices have been
part heard by the ED. The proceedings of
the case have been adjourned, pending the
hearing of an appeal to the Supreme Court
on procedural matters which has not been
10,207
Between 2 to 5 years
8,224
29,673
16,493
39,880
AED’000
Final dividend for the year ended 31 December 2012 of AED 0.45 per share
3,556,224
Interim dividend for the year ended 31 December 2013 of AED 0.35 per share
2,765,952
6,322,176
31 December 2014
Final dividend for the year ended 31 December 2013 of AED 0.35 per share
2,765,953
Interim dividend for the year ended 31 December 2014 of AED 0.35 per share
2,765,952
5,531,905
35. Earnings per share
8,269
ii) With reference to ongoing litigation
at various courts in Pakistan regarding
31 December 2013
At the reporting date, the Group had contracted with tenants for the following future minimum lease payments:‎
Within one year
i) The Group is disputing certain charges
from the governmental and telecom
regulatory agencies in the UAE and
certain other jurisdictions but does ‎
not
expect any material adverse effect on the
Group›s financial position and results from
resolution of these.
Amounts recognised as distribution to equity holders:
Property rental income earned during the year was AED 11 million (2013: AED 12 million). All of the properties held h
‎ ave committed
tenants for the next 4 years.‎
2013
AED’000
c)‎Other contingent liabilities
pension increases and pertinent medical
allowance cases, pertaining to the Group›s
subsidiary Pakistan Telecommunication
Company Limited (PTCL), the Honorable
Supreme Court of Pakistan suspended the
operation of the related order passed by the
divisional bench of Honorable Islamabad
High Court. On completion of proceedings,
the decision is reserved by the Honorable
Supreme Court of Pakistan. Since the
subject matter is complex and uncertain in
nature, the financial implications cannot
presently be ascertained with finality.
34. Dividends
A final dividend of AED 0.35 per share was
declared by the Board of Directors on 4 March
2014, bringing the total ‎dividend to AED 0.70
per share for the year ended 31 December 2013.‎
2014
AED’000
heard as at the consolidated statement of
financial position date.
An interim dividend of AED 0.35 per
share was declared by the Board of
Directors on 20 July 2014 for the year
ended 31 ‎December 2014.‎
A final dividend of AED 0.35 per share was
declared by the Board of Directors on 25 February
2015, bringing the total d‎ ividend to AED 0.70 per
share for the year ended 31 December 2014.
2014
2013
8,892,019
7,078,388
7,906,140
7,906,140
Earnings (AED’000)
Earnings for the purposes of basic earnings per share being the profit attributable to the equity
holders of the Corporation
Number of shares (‘000)
Weighted average number of ordinary shares for the purposes of basic earnings per share
The Group does not have potentially dilutive shares and accordingly, diluted earnings per share equals to basic e‎ arnings per share.‎
112
Annual Report 2014
Etisalat
113
Financials
Emirates Telecommunications Corporation
Emirates Telecommunications Corporation
Notes to the consolidated financial statements for year ended 31 December 2014
Notes to the consolidated financial statements for year ended 31 December 2014
36. Disposal Group held for sale/ Discontinued operations
37. Subsequent events
On 3rd June 2014 the directors approved
a plan to dispose of the Group’s interest
in one of the subsidiary of the group. The
disposal is in line with the Group›s strategy
to optimise its returns on investments in
the international segment. The Group
is currently in negotiation with some
potential buyers.
Revenue
Operating expenses
Operating profit
Finance and other income
Finance costs
Loss for the year from a discontinued operation
The results of operations included in the
profit for the year from discontinued
operations are set out below.
2014
AED’000
2013
AED’000
299,666
297,121
(408,513)
(311,243)
(108,847)
(14,122)
41,001
(257)
(50,262)
(49,137)
(118,108)
(63,516)
On 26 January 2015,
Emirates
Telecommunications
Corporation
(“Etisalat”), Atlantique Telecom SA (“AT”)
and Etisalat International Benin Limited
(“EffiL”) successfully completed the sale of
Etisalat›s shareholdings in its operations in
Benin, the Central African Republic, Gabon,
the Ivory Coast, Niger, Togo and Prestige
Telecom to Etisalat AI Maghrib (“Maroc
Telecom”).
The final consideration in return for
Etisalat’s equity in and receivables
(including shareholder loans) from these
seven companies amounted to Euro 474
million.
At 31 December 2014 the disposal group comprised the following assets and liabilities
Assets classified as held for sale
2014
AED’000
Goodwill
44,896
Other intangible assets
74,075
Property, plant and equipment
255,245
Other investments
3,570
Inventories
11,374
Trade and other receivables
Cash and cash equivalents
134,682
8,915
Assets classified as held for sale
532,757
Liabilities classified as held for sale
2014
AED’000
Trade and other payables
860,862
Borrowings
263,379
Provision for end of service benefits
Liabilities associated with assets classified as held for sale
2,276
1,126,517
Net liabilities classified as held for sale
593,760
Cash flows from discontinued operations
2014
AED’000
Net cash inflows from operating activities
24,861
Net cash outflows from investing activities
(309)
Net cash outflows from financing activities
(89,055)
Net cash outflows
(64,503)
Cumulative income or expense recognised in other comprehensive income
There are no cumulative income or expenses recognised in other comprehensive income relating to the disposal group
114
Annual Report 2014
Etisalat
115
Notice of Ordinary and Extraordinary General Shareholders Meetings
The Board of Directors of Emirates Telecommunications Corporation “Etisalat” is pleased to invite the Corporation’s esteemed shareholders
to attend the Ordinary and Extraordinary General Shareholders’ Meetings to be held consecutively from 4:30 p.m. on Tuesday 24th March
2015 at Etisalat Head Office building in Abu Dhabi, where the following meeting agenda will be discussed:
Agenda of the Ordinary General Assembly
1. To hear and approve the report of the Board of Directors on the Corporation’s activities and its financial position for the financial year
ended 31st December 2014.
2. To hear and approve the External Auditors’ report for the financial year ended 31st December 2014.
3. To discuss and approve the Corporation’s consolidated statements of financial position and profit or loss for the year ended 31st
December 2014.
4. To consider the Board of Directors’ recommendations on the distribution of dividends in the amount of 35 fils per share for the second
half of the year 2014, bringing the full dividend paid out for the financial year ended 31st December 2014 to 70 fils per share, in
addition to considering the Board of Directors’ recommendation for issuance of 10% bonus shares.
5. To look into the remunerations of the Members of the Board of Directors.
6. To absolve the Members of the Board of Directors and the External Auditors of liability in respect of the financial year ended 31st
December 2014.
7. To appoint External Auditors for the year 2015 and to determine their fees.
Agenda of the Extraordinary General Assembly:
1. To elect four persons to fill the four Board of Directors’ seats allocated for national shareholders who are not appointed by the
Government.
2. To look into increasing the Corporation’s capital.
Notes:
1. Each shareholder is entitled to attend or to delegate a proxy to be present at the Ordinary and Extraordinary General Shareholders’
Meetings on his/her behalf by virtue of an authorization made pursuant to the delegation form attached with the invitation dispatched
by mail (minors and those who have no legal capacity shall be represented by their legal representatives). All delegation forms shall
be submitted to the Securities Department of the National Bank of Abu Dhabi, P.O. Box 6865-Abu Dhabi, at least two days before the
meeting date in order to register the same in the respective records. Only original delegations will be accepted.
2. Only the owners of the shares as of Monday, 23rd March 2015 shall be entitled to vote in the Ordinary and Extraordinary General
Shareholders’ Meetings.
3. The owners of the shares as of Sunday, 5th April 2015 shall be entitled to shares’ dividends.
4. The shareholders can review the Corporation’s financial statements on the websites of Etisalat and Abu Dhabi Securities Exchange
(ADX).
5. To ensure good organization of the Ordinary and Extraordinary General Shareholders’ Meetings, any shareholder who attends after the
beginning of the meeting shall neither be counted for the quorum nor entitled to vote.
6 If the quorum for the first Ordinary and Extraordinary General Shareholders’ Meetings have not been met, the second meeting shall
be held on 31st March 2015 at the same place and time.
116
Annual Report 2014
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