‫‪Emirates Telecommunications Corporation – Etisalat Annual Report 2009‬‬
‫مؤسســــة اإلمــــارات لإلتصاالت ‪ -‬إتصـــاالت التقـــــرير الســنـــوي ‪2009‬‬
‫‪Annual Report 2009‬‬
‫التـقــريـر الـسـنـوي ‪2009‬‬
Reports and Consolidated Financial Statements
‫التقارير والبيانات المالية الموحدة‬
for the year ended 31 December 2009
2009 ‫ ديسمبر‬31 ‫للسنة المنتهية في‬
Contents
Chairman’s Statement Board of Directors and
Executive Committee
Group Highlights
Chief Executive Officer’s Statement
Management Review UAE Highlights
On the ground – a market view
Network
Etisalat Services Holding
Human capital Corporate Social Responsibility
Corporate Governance
‫المحتويات‬
2
4
6
8
10
12
15
24
27
28
31
32
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
Telephone: +971 2 6283333
Fax: +971 2 6317000
Telex: 22135 ETCHO EM
etisalat.ae
Regional Offices:
Abu Dhabi, Dubai, Northern Emirates
Financial Statements
Independent Auditors’ Report
to the Shareholders
Consolidated Income Statement
Consolidated Statement of
Comprehensive Income Consolidated Statement of
Financial Position
Consolidated Statement of
Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated
Financial Statements
Notice of Meeting
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35
36
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77
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‫البيـانات المـاليـة الموحدة‬
2
‫كلمة رئيس مجلس اإلدارة‬
34
‫تقرير مدققي الحسابات المستقلين‬
‫إلى السادة المساهمين‬
4
‫مجلس اإلدارة واللجنة التنفيذية‬
35
‫الموحد‬
‫بيان الدخل‬
ّ
6
‫المؤشرات الهـامة‬
36
‫الموحد‬
‫بيان الدخل الشامل‬
ّ
8
‫كلمـة الرئيـس التنفيـذي‬
37
‫الموحد‬
‫بيان المركز المالي‬
ّ
38
‫الموحد‬
‫بيان التغيرات في حقوق الملكية‬
ّ
39
‫الموحد‬
‫بيان التدفقات النقدية‬
ّ
40
‫إيضاحات حول البيانات المالية الموحدة‬
77
‫إعالن انعقاد إجتماع الجمعية العمومية‬
10
‫تقريــر اإلدارة‬
12
‫المؤشرات الهـامة المحليـة‬
15
‫لمحة عن السوق‬
24
‫الشبكة‬
27
‫إتصاالت للخدمات القابضة‬
28
‫الموارد البشرية‬
31
‫المسؤولية االجتماعية للشركة‬
32
‫حوكمة الشركات‬
:‫المركز الرئيسي‬
‫بناية إتصاالت‬
‫تقاطع شارع الشيخ زايد األول مع شارع‬
‫الشيخ راشد بن سعيد المكتوم‬
3838 ‫ رقم‬.‫ب‬.‫ص‬
‫ اإلمارات العربية المتحدة‬،‫أبوظبي‬
+971 2 6283333 : ‫هاتف‬
+971 2 6317000 : ‫فاكس‬
.‫م‬.‫ اتكو أ‬22135 : ‫تلـكس‬
22135 ETCHO EM
etisalat.ae
:‫مكاتب المناطق‬
‫ دبي واإلمارات الشمالية‬،‫أبوظبي‬
Enabling Reach
1
Year on year growth
in dividend
+20%
Year on year growth
in aggregate subscribers’ base
+34%
Year on year growth
in capital expenditure
+74%
Year on year growth
in earnings per share
+4%
Year on year growth
in profit
+4%
Year on year growth
in revenue
+5%
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Chairman’s Statement
However, we responded by enhancing our
product portfolio and adding several
value-for-money offerings. In addition, we
rationalised our investments and expenditure
and placed more focus on solidifying our
financial strength and liquidity.
Dear shareholders,
I am honoured to present to you another
chapter of Etisalat’s success story, the
Annual Report of 2009 that marks the
Corporation’s strong operational and
financial achievements. Despite the global
financial crisis that intensified in the past
year and left profound impacts on the
world economy and spared no industry,
we were able to post positive results
and make strategic investments that
positioned us for a better future and
enhanced shareholders’ long term value.
Let me first outline to you some of the major
highlights of 2009 that demonstrate our success:
•Aggregate
subscribers’ base exceeded 107
million, representing an increase of 34%.
•Consolidated
revenue was up more than
5% to AED 30.8 billion.
•Earnings
per share (EPS) grew 4.2% to
AED 1.23 per share.
•Dividends
distributed to shareholders
totalled AED 3.9 billion, an increase of
20% from 2008.
•Maintained
strong cash balance at
AED 11.3 billion driven by strong cash flow
generation. This cash position allowed us
to have strong credit ratings, pay dividends,
continue to invest in our networks and
finance our acquisitions.
•We
have a negative net debt position of
AED 7.5 billion that is uncommon to see
in our industry.
•Capital
spending amounted to AED 6.8
billion, representing an increase of 74%.
Nevertheless, this does not mean that we
were immune to the economic slowdown.
Our sales growth was impacted in selected
markets and margins came under pressure
as customers rationalised their total spending
and as competition intensified across all
markets including the UAE. This was further
worsened by unfavourable movements in
foreign exchange rates.
More people, companies and governments
place increasing importance on
telecommunications services. Customers’
communication needs keep growing in
terms of mobility, value added services and
broadband speed. Companies are looking for
ways to drive better efficiency and sustain
profitability in the current market conditions
and telecom services are one of the viable
solutions. Governments are embracing more
telecom services in their entities to modernise
their operations and enhance productivity.
All of these provide us with tremendous
opportunities to fulfil these growing needs
and consequently expand our revenue base.
We continued to differentiate ourselves and
excel through our advanced networks and
innovative product offerings. In 2009,
we were the first mobile operator to launch
both iPhone 3G and 3GS in the GCC, as we
did with BlackBerry in 2006. The iPhone is
available in selected markets allowing
customers to access their emails, surf the
internet, download music, watch video and
remain connected to their social networks
at their convenience - thus, fuelling the
growth of mobile internet.
Furthermore, the Corporation leveraged its
advanced 3G and WiMax networks to
introduce attractive wireless broadband offers
increasing the overall value proposition and
creating new segments in the market.
We maintained our disciplined approach in
our international strategy and evaluated
investment opportunities more cautiously.
We improved our presence in the Asian
market by adding Tigo, the second mobile
operator in Sri Lanka to our international
portfolio. This acquisition fits into our expansion
strategy and will be accretive to shareholders’
long term value. As for the rest of our portfolio,
we keep investing in our networks to improve
capacity, coverage and quality to enable us to
build market share. We plan to continue
expanding our reach in targeted regions and
further establish Etisalat as a trusted brand
for a global telecom service provider.
3
Despite the challenging market conditions,
shareholders of Etisalat have been well
rewarded for their investment. The
Corporation has declared a total dividend of
AED 0.60 per share for 2009, representing a
dividend yield of 5.45%. Shareholders have
also been rewarded through an increase in
the share price, which grew by 33% in 2009.
In addition, the Corporation will make a
federal royalty payment of AED 8.8 billion
to the Federal Government.
The Corporation remains committed to
employee development and we continued to
invest in several training programmes in the UAE
and in our various operations around the world.
We are fortunate to have an experienced
Board of Directors to help the Corporation
address key important issues and to provide
variety of thought to the management team.
I have never been prouder of this Corporation
and its people than I am today. I can assure
you that we are better placed to face the
anticipated challenges of year 2010, given our
advanced networks, broad product offerings,
human and financial resources, prudent financial
policies and determined management team.
Finally I would like to thank you, our
shareholders for the trust you place in our
Corporation, its Board, and management team.
Sincerely,
Mohammed Hassan Omran
Chairman and Managing Director
22 February 2010
Board of Directors and Executive Committee
left to right
H.E. Saeed Mohamed Al Sharid
Member
H.E. Sheikh Ahmed Mohammad
Sultan bin Suroor Al Dhaheri
H.E. Mohammad Hassan Omran
Member
Chairman
Chairman Executive Committee
H.E. Mubarak Rashed Al Mansoori
H.E. Khalaf Bin Ahmed Al Otaiba
Member
Member Executive Committee
Vice Chairman
H.E. Abdul Rehman Al Rostomani
Member
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H.E. Omar Saif Bin Mohammad Al Huraiz
H.E. Hamad Mohammad Al Hurr Al Suweidi
H.E. Soud Ahmad Abdulrahman Ba’alawy
Member
Member
Member
H.E. Ahmed Eisa Bin Nasser Al Serkal
H.E. Dr. Omar Mohammad Bin Sulaiman
Member
Member Executive Committee
Member
Member Executive Committee
Mr. Isam Meccawi Suliman Akrat
Corporation Secretary
5
Group Highlights
Africa
Middle East
Asia
Atlantique Telecom
Canar
Etisalat Misr
Etisalat, UAE
Etihad Etisalat (Mobily)
Thuraya
Etisalat Services Holding
- Etisalat Academy
- Directory Services
- Ebtikar Card Systems
Etisalat Afghanistan
Etisalat DB Telecom
Private Limited
Emerging Market Telecommunications
Services Limited (Etisalat Nigeria)
Zantel
Etisalat Software Solutions (Pvt.) Ltd.
(Technologia)
PT XL Axiata Tbk
Pakistan Telecommunications Company
Limited (PTCL)
TIGO (etisalat Sri Lanka)
- Emirates Data Clearing House (EDCH)
- E-Marine
- E-Real Estate
- Etisalat Facilities Management
- Tamdeed Project Unit
Breakdown of Revenue – Group
6
Others
10%
Interconnect
6%
Data Services
12%
Internet
9%
Mobile
9%
53%
Telephones
(Year Ended December 31, 2009)
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6798
8836
30831
8511
29360
7297
21340
5860
3908
16290
3460
4256
12866
1432
1259
05
06
07
08
Revenue (AED millions)
09
05
06
07
08
Net Profit (AED millions)
Fiscal year 2008 & 2009 are reported in accordance with the International Financial Reporting Standards – IFRS
7
09
05
06
07
08
Capex (AED millions)
09
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CEO’s Statement
It is my pleasure to submit to you the
2009 Annual Report of Etisalat for the
financial year ended 31 December 2009.
The unprecedented financial crisis has
triggered recession across the globe and
to a certain degree impacted the business
environment in the UAE as well. Due to
the worsening global economy, equity
markets tumbled, real estate dropped in
value, bank financing dried up, and
consumers’ spending came under pressure.
For Etisalat in the UAE the stance has
been to remain focused and committed on
improving long-term shareholder value,
emphasising sustainable growth in sales
and profits whilst delivering products and
services in line with the economic climate,
and continuing our part of being not only
a profitable corporation but a sustainable
entity for the country and its people.
Despite the economic slump, the mature
mobile market in the UAE where the total
number of subscribers surpassed 10 million
with the penetration rate exceeding 200%,
and the intensified competition that resulted
in reduction in international tariffs, Etisalat
managed to lessen the impact of these factors
on its operational and financial results. This
was mainly accomplished by seeking new
revenue streams through improving and
upgrading our network with advanced
technologies to enable the offering of new
products and services. These included higher
speed broadband packages, improved value
added services, iPhone 3G and 3GS, new
promotions like “Pay AED 75 for a new Wasel
Connection with 100% cash back”, “Wasel
24 millionaires’ campaign”. In addition, new
distribution channels have been developed to
ensure we reach customers across the UAE.
These efforts, together with implementing a
combined strategy, focusing on new customer
acquisitions and increasing customer loyalty
proved a great success in reinforcing Etisalat’s
position as the leading telecommunications
provider in the UAE. Net revenue for the UAE
operations marginally declined by 0.7%,
however proactive cost optimisation measures
resulted in net profit growth of more than
9% after normalising the 2008 result for the
one-time impact from the sale of Mobily’s
shares. On the operational side, Etisalat UAE
continued to post growth in the number of
subscribers despite the high penetration rate.
Accordingly, the mobile subscriber base grew by
6% to 7.74 million and internet subscribers
grew by 15% to 1.33 million.
Our commitment to offer cutting edgetechnology was boosted by having completed
60% of the roll out of the Fibre-To-The-Home
(FTTH) network in the UAE. We have intensified
our efforts to achieve 100% coverage of the
UAE by 2011 and we are close to making Abu
Dhabi the first capital city in the world with
100% fibre deployment by 2010. Additionally,
it was a great delight to see our Double and
Triple Play services launched in the market
under the name of “eLife” - services that
combine broadband internet access, landline
and IP TV services in one bundled offer. eLife
will boost the adoption of high-speed
internet services and will also enable our
customers to experience service quality while
running applications like video on demand
and online gaming.
We are ready to launch additional mobile
banking services that will enable the expatriate
population in the UAE to remit money to their
home country using their mobile phone anytime,
anywhere without a trip to the bank or other
financial exchanges. This will provide convenient
and secure solutions especially to individuals
without bank accounts and will also pave the
way for mobile payments in new areas.
Sponsorships in 2009 helped us increase our
brand awareness and demonstrated to our
customers that we are capable of bringing the
most exciting entertainment to their lives. As
part of our commitment to bring the best of
sports to the UAE, we signed a two-year
agreement with FIFA, the international
governing association for football, to sponsor
the FIFA Club World Cup UAE tournament
in 2009 and 2010 in Abu Dhabi. We also
continued our sponsorships of the Abu Dhabi
Golf Championship, the Dubai World Cup and
the Etisalat Football league, among others.
During the year 2009 Etisalat has been
recognised many times by international
agencies for its accomplishments in different
fields in the telecom sector. Telecoms World
Middle East 2009 granted Etisalat “Best Value
Added Service Award” for its internet TV
platform. SAMENA Telecommunications Council
awarded Etisalat “Best Content Provider of the
Year”, “Best Wireless Broadband Operator of
the Year”, “Best FFx/GPON Operator of the
Year”, and “Best Quality of Services Operator
of the Year” amongst other accolades.
Etisalat’s approach to corporate social
responsibility is to support selected social and
economic activities and events either through
funding, technology or direct support. The main
categories of Etisalat’s CSR programmes are
educational, special needs and environmental
where not only financial aid is contributed
but also services, knowledge and expertise
are shared with the organisations.
9
In 2009 Etisalat’s continuing support for people
with special needs was a prominent part of its
CSR contribution. Etisalat joined forces with
the Telecommunications Regulatory Authority
in the nationwide project “Echo of Silence” which
aims to enable individuals with hearing or speaking
impairment to communicate and interact with
society while assisting them in benefiting from
new channels of communications, through
advanced technical programmes giving them the
same opportunities as their colleagues as well as
providing them with independence in living and
working as full contributors to society.
Our commitment to well-established financial
policies has resulted in a healthy financial
position demonstrated by strong cash flow
generation and a solid balance sheet. We have
minimal debt and sufficient liquidity in such
a critical time where many are struggling
with their debt servicing.
None of this could be achieved without the
dedication, professionalism and knowledge
of our employees who are all contributors to
our results in their daily work at all levels.
Furthermore, I would like to take this opportunity
to thank and value the leadership of the country
and the UAE Government for taking a lead in
responding to the economic slowdown by
announcing stimulus packages and other
efforts to support the economy and stabilise
the financial market.
We do anticipate that a challenging
environment will continue for some time as
it is difficult to predict a rapid recovery of the
economy; however we are well positioned for
long-term growth given our product portfolio
and commitment to a prudent investing
approach in our business. We will continue
to focus on strengthening our position in
various business segments, delivering innovative
solutions and bringing the latest technology
to our enterprise customers and consumers,
and creating long-term shareholder value.
Mohammed Khalfan Al Qamzi
Chief Executive Officer
22 February 2010
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Management Review
We maintained our financial flexibility
by exercising prudent financial policies.
We are fortunate not to have a sizeable debt
position in such market conditions. At year
end, we have a debt position of AED 4.5 billion
and a liquidity position of AED 11.3 billion.
Financial Results
The Corporation delivered good
performance in 2009. Revenue increased
by 5% to AED 30.8 billion, mainly driven
by data and internet growth. Operating
profit before Federal Royalty was up by
16% to AED 17.6 billion and EPS
increased 4% to AED 1.23.
We strived to position the Corporation for
long-term sustainable growth by directing
our capital spending towards higher growth
areas such as Fibre-To-The-Home (FTTH),
high-speed mobile broadband, data services
and others. During 2009, capital expenditures
increased 74% to AED 6.8 billion as the
Corporation went ahead in its strategic
investment and expanded the coverage of its
network in most of our operations. With time,
we do expect these investments to contribute
to the Corporation’s bottom line.
We continued to create value for our
shareholders by investing the cash flow
generated by our business in investments and
operations that support the strategic imperatives
mentioned above. In addition, we use our cash
flows to pay cash dividends and royalty. Net cash
generated from operating activities for the year
ended December 31, 2009 was AED 10.12 billion
compared with AED 10.59 billion in the previous
year. This marginal decrease was primarily
attributable to changes in working capital.
We maintained a constructive relationship
with the three rating agencies and retained
investment grade ratings. As of December
2009, our long debt ratings are A+ by
Standard & Poor’s; Aa2 by Moody’s; and
A+ by Fitch. The unfavourable change in the
long-term rating assigned by Fitch Rating Agency
was due to Fitch’s revised view of the UAE
sovereign ratings. However, this is still one of the
highest credit ratings for telecommunications
companies around the world.
The Board of Directors has recommended a
final dividend for 2009 of AED 0.35 per share.
Given the interim dividend of AED 0.25 per
share, which was paid by the Corporation in
the third quarter of 2009, the overall total
dividend for the year is AED 0.60 per share.
The proposed dividend will be submitted for
approval at the Annual General Meeting of
Shareholders (AGM) on 23 March 2010.
Although market conditions for 2010 seem
difficult to predict, we will stay focused on
managing our costs and driving synergies in
various areas of our business. In addition,
we will maintain a responsible and conservative
approach to our financial strategy as we
continue to pursue an optimal balance between
shareholder return and financial flexibility.
The following table shows selected historical data for the year ended December 31, 2009 and 2008.
Selected Financial Data
AED in millions except per share amounts
2009
As of December 31 or for the year ended
2008
Change (%)
Income Statement Data
Revenue
Net Profit
30,831
8,836
29,360
8,511
+5.0%
+3.8%
Balance Sheet Data
Total Assets
Total Liabilities
Total Equity
Net Debt (1) 71,379
30,989
40,389
(7,454)
62,918
27,298
35,620
(8,537)
+13.4%
+13.5%
+13.4%
(13.0%)
Cash Flow Data
Net cash flow from operating activities
Net cash flow from investing activities
Net cash flow from financing activities
10,125
(6,771)
(3,407)
10,596
(2,902)
(5,642)
(4.4%)
+133.0%
(39.6%)
Earnings & Dividends Per Share Data EPS
DPS
Number of issued shares (million)
Long-term rating of Etisalat
2008
2009
Outlook
(1) Net Debt represents interest-bearing debt less cash and cash equivalent.
10
1.23
0.60
7,187.4
1.18
0.60
5,989.5
+4.2%
0.0%
20.0%
S&P
Moody’s
Fitch
A+
A+
Stable
Aa2
Aa2
Stable
AAA+
Stable
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UAE Highlights
7741
1358
10%
1325
1309
Others
1285
7285
3%
1237
Interconnect
13%
6372
Data Services
10%
5520
Internet
11%
4534
Telephones
53%
Mobile
2009
05
06
07
Breakdown of Revenue
UAE
Mobile Subscribers
Fixed Line Subscribers
(thousand subscribers)
(thousand subscribers)
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08
09
05
06
07
08
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1331
4158
19410
3989
18252
3847
17770
3769
1153
3386
15650
13618
875
660
527
05
06
07
08
09
05
06
07
08
09
05
06
07
08
Internet Subscribers
National Calls
International Calls
(thousand subscribers)
)million minutes(
)million minutes(
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09
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Management Review continued
This work collaboration between the
operations will increasingly allow Etisalat to
build a set of capabilities in all areas and give
unprecedented market intelligence in the race
to market. It will also increase market share and
maintain a sustainable level of revenue growth.
On the ground – a market view
Etisalat’s network today covers two
continents and eighteen countries.
Most of these are in large land areas in
emerging markets, with low penetration,
very diverse market attributes, and
promising economic growth despite
the prevailing challenging conditions.
Etisalat will continue to target the diverse
customer base in its existing footprint with
tailored promotions and packages, offering
highly advanced technology with excellent
service delivery. With operations in seventeen
countries at the beginning of 2009, Etisalat
kept its focus on the Middle East, Africa and
Southeast Asia regions and completed the
acquisition of Tigo, a Sri Lankan mobile
operator, with a 100% ownership stake,
bringing total Etisalat operations to eighteen.
In addition, the prevailing economic climate
has increased our focus on controlling
operating expenditures across the entire
network. We are concentrating on a shorter
time to market in deployment, pushing for
further convergence in the networks as well
as pushing for innovative and competitive
market offerings.
In 2009, Etisalat UAE laid the foundations of
an interaction model between all subsidiaries
and associates, to increase the synergies
amongst them.
During the year, common frameworks
on Strategy, Product & Services and Brand
Communication have been worked on, as well
as initiating common procurement grounds.
Etisalat has established itself as a single
customer to the main vendors where applicable.
Discussing common issues and sharing ideas
has widened our knowledge base. Further
benefits have been seen as new International
Dialling Destination (IDD) offers such as in
Egypt/Kingdom of Saudi Arabia and Pakistan/
Afghanistan have been introduced, with great
market response and increases in revenue.
Etisalat’s strategy for the next year is to
continue its focus on expanding in high-growth
regions, with emphasis on Broadband, Mobile
Payment, Information and Communication
Technologies (ICT) and Digital Media opportunities.
In addition, our 2010 priorities are to achieve
new synergies in roaming and international
pricing, leveraging on a larger scale to improve
efficiencies in IT & network procurement, and
progressing to becoming a global brand.
Africa
Atlantique Telecom, West Africa
In 2009 Atlantique Telecom (AT) continued to
woo the market, which covers seven countries
and a population of over 70 million. The countries
are diverse and consumers have a choice of at
least three operators including AT. During 2009,
the Moov brand has strengthened further;
it is now used in all seven entities, and brand
recognition is increasing in all areas as a young,
dynamic and innovative brand of choice.
A steady revenue stream is projected for
2010, primarily driven by continuous network
expansion, launch of new services such as
the BlackBerry, and planned new promotions.
Working extensively on reorganising some
of the distribution channels has strengthened
the financial contribution by reducing overall
expenditure. Moreover, per second billing,
e-vouchers, and prepaid roaming were
introduced into the market. These were well
perceived and yielded positive results. Most
outstanding, though, was the launch of
‘Moovprivilege’ for the high-value segment,
where flat rate and special IDD rates for a
minimum monthly consumption were used
to control and reduce churn. The company
also launched ‘Moov’in’ – a package tailored
for youth, offering free calls and SMS for
a minimum charge. In Gabon, a new On-Net
tariff was introduced to increase On-Net
traffic and margin per minute, to boost
acquisition rate, and to reduce revenue
dependency on IDD traffic. As a result the
minutes of use On-Net increased by 48%
and the customer base by 10%.
15
In 2010, new promotions will be launched
in all markets, targeting various consumer
segments. In addition, exciting new content
provisioning will be added, utilising mobile
internet and broadband facilities. We plan
to further improve the commercial quality
of services and implement a customer
loyalty programme.
Canar, Sudan
Sudan still has massive growth potential as
the teledensity is still low, especially in the
fixed-line market. Much of this is due to the
difficult circumstances still prevailing in the
country, where the average income per capita
is still amongst the lowest in the African
continent. As such Canar, as one of the two
fixed-line operators, not only competes with
the fixed-line operator but also with all the
mobile operators in the market, due to the
very limited per capita income and the
fixed-to-mobile substitution.
During 2009, fibre optic links between Sudan
and Ethiopia were rolled out as part of overall
plans to expand the Canar fibre network
across all neighbouring countries. This will
maximise use of the Canar submarine landing
station, which is an integral part of the Canar
Wholesale offer in international connectivity
for the region. Moreover, Canar established
STM-1 links with Flag Hong Kong, as well
as provisioning seven new international
interconnections.
In the enterprise market, the focus was
concentrated on expanding internet broadband
services – a market that is becoming of greater
interest as Canar’s network expands further in
Sudan. On the consumer side, the company
concentrated on revamping some of the existing
packages, as well as introducing a ‘Double
Your Recharge’ promotion and launching the
‘Free On Net Campaign’.
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Management Review continued
Etisalat Misr, Egypt
Etisalat Misr continues to prove itself as the
innovative breakthrough operator in the
African market. Two years ahead of the
National Telecom Regulatory Authority’s
(NTRA) licence coverage obligations, Etisalat
Misr now covers 98% of the entire country –
less than 30 months after commercial launch.
This includes both EDGE and 3.75G services
in all areas enjoying 2G and 3G coverage. In
addition to this, for the sixth consecutive time
Etisalat Misr scored the highest in the key
performance indicators in the NTRA’s
benchmarking report. This recognised its
excellent network reliability, with Core and
Access availability maintained at 100% and
99.95% respectively. Moreover, Etisalat Misr
is the only mobile operator in Egypt with an
exclusive international gateway, whereby
customers enjoy competitive international
rates to all destinations worldwide in the
Kol El Donya offer.
From a technological perspective, the most
notable achievement during 2009 was
Etisalat Misr’s very successful HSPA+ live trial.
This succeeded in achieving average throughput
of 19.2 Mbps, making Etisalat Misr the first
African operator to accomplish this.
Etisalat Misr has set out to revolutionise the
Egyptian market. It is breaking barriers by
offering not only highly innovative corporate
solutions to the ever-growing number of
corporate customers, but more so by offering
high-value propositions to an ever-demanding
and increasingly sophisticated consumer
market. Dramatically changing the market
dynamics, Etisalat Misr has strived to provide
products and services that are simple and
transparent, while maintaining a sustainable
and responsible business model that can
adapt to a fast-paced and swiftly-changing
marketplace, whilst continuously increasing
average revenue per user (ARPU).
1
Putting the customer first, Etisalat Misr
introduced the convenient tariff plan for
Ahlan Kol El Nas that is tailor-made to best
suit customers’ needs. This gives customers
one flat voice minute rate for on net, cross
net and landline calls. This broke the barrier
preset by mobile operators who consistently
restricted promotions in the on-net rate
plans. The simple, straightforward Ahlan Kol
El Nas tariff not only strengthened Etisalat’s
image as a market pioneer, but also opened
the door to a massive pool of potential
customers, as well as retaining existing
customers. To maintain its leadership in
offering clear and simple propositions Etisalat
also launched a unique tariff for the postpaid
segments – ‘Green Line Unlimited’ – where
the customer enjoys the luxury and freedom
of making unlimited free voice calls, free SMS,
and mobile internet at any time of the day. In
order to capture a greater share of the youth
segment, a new tailored proposition was
introduced to this segment in YES, giving
special rates for three on-net numbers as
well as free internet during weekends up to
a maximum of 5 MB per day. Prepaid mobile
broadband services were also introduced to
address the untapped mass market for
affordable broadband service. This will ensure
that the company can capitalise on the
introduction of 3.75G services in the Egyptian
market, and establish a position as the
innovative mobile operator.
Emerging Market Telecommunications
Services Limited (Etisalat Nigeria), Nigeria
Expanding EMTS coverage of major cities
from seven at the end of 2008 to seventy-six
in 2009,1 (which includes 34 state capitals), as
well as implementing EDGE everywhere in
order to launch Data Service, Etisalat Nigeria
is achieving milestones in its network
strategy and roll-out. The strategy for 2009
was to achieve the widest network coverage
possible in the first year of operation by
rolling out 1,090 cell sites and achieving a
firm subscriber base, which was accomplished
by the end of 2009 through its parameters
of Innovation, Quality and Customer Focus.
A major city is a city/town/commercial hub with a population >50,000 and strong commercial activities.
16
The market propositions were continuously
introduced throughout the year in a
disciplined and rigorous manner: Easy Cliq,
Enuff yarn+, Easy net, BlackBerry, Eliteworld
Postpaid, and Eliteworld Prepaid.
In 2009, research also shows that consumers
placed Etisalat second in such areas as ‘word
of mouth buzz’ and ‘word of mouth
advocacy’, as well as customer satisfaction –
an indication that in 2010 the brand’s
popularity and market share is expected to
grow in leaps and bounds.
Zantel, Tanzania
As Tanzania continues to develop,
the dynamics of marketplace, customer
expectations and demands changed too.
This necessitated a change in Zantel’s product
portfolio to meet these new demands, such
as in the introduction of BlackBerry and
associated services. This launch of BlackBerry
services was one of the major launches in
Tanzania and, as in other places, an instant
hit with the customers.
To combat churn in this quite volatile market,
Zantel introduced an offer of 1 tsh per
second billing, which resulted in a record
activation of over 1 million customers both
new and existing, and considerably raised
the ARPU. Another notable offer from Zantel
was Customer Credit Loans – a banking
service building on the ‘Z Pesa’ launched
in 2008, in addition to the Mkesha and
Mzuka mixed bundles.
By reengineering certain processes to
function more efficiently, additional revenue
has been secured. The sales network and
resellers’ conditions have been fully reviewed
for cost optimisation. This overview will continue
throughout 2010 as part of the overall cost
control programme.
17
18
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Management Review continued
Middle East
Etisalat, UAE
In the UAE, where mobile penetration is
already among the highest in the world, the
focus has been on shortening the time to
market in introducing new and enhanced
existing mobile services. Through upgrades
and expansions in the core elements of the
backbone, IP transmission is increased across
the network in line with customer expectations
and demands, keeping to on-time service and
simplicity of use.
Etisalat also focused on continuing its
strategy to maintain quality of service and
on-time provisioning with greater flexibility
in response to changing customer need, whilst
offering cost-effective services to all its
customer segments. During 2009 the Company
continued looking for opportunities to reduce
operating expenditures, while making progress
in its network convergence with minimal
capital investment in the legacy network.
Etisalat intensified its efforts to roll out its
Fibre-To-The-Home (FTTH) network in the
UAE. By the end of 2009 Etisalat had completed
the FTTH roll-out for 85% of households in
Abu Dhabi, positioning the UAE’s capital as
the first in the world to be covered by fibre.
The launch of eLife brought the promise of
the most advanced technology applications
to the UAE market. Its high-speed broadband
internet enables customers to enjoy multiple
high bandwidth applications such as IPTV and
online gaming in an integrated single interface
for landline, internet and television-based
services, providing a truly converged digital
home experience to its customers.
Furthermore, Etisalat strived to position itself
as a leader in Digital Content & Media, and as
a result won ‘The Best Value Added Service’
Award at The Telecoms World Awards Middle
East. As part of the Mobile TV Consortium in the
UAE, Etisalat was also awarded the Mobile TV
Digital Video Broadcasting (DVB-H) Licence,
with a vision to be a regional hub for delivering
DVB-H/high quality Mobile TV content.
Continuing the broadband initiative, Etisalat
leveraged its advanced 3G networks to
introduce attractive wireless broadband
offers, increasing the overall value proposition
and creating new market segments. Mobile
Data packages were upgraded with increased
bandwidth capacity at very attractive prices,
enabling customers to choose the best package
for their needs and usage for both Mobile
Internet and Mobile Broadband. These options
were introduced with the iPhone, new BlackBerry
models, and the HTC Magic, among others.
To better address the low-income segments,
Etisalat launched more affordable mobile
services with the first-ever Etisalat branded
handset. In addition, the cost of a new SIM
was reduced by more than half for a limited
period for this segment.
Given the upswing in mobile internet and
broadband, Etisalat worked closely with major
enterprise customers in the fields of Broadband,
Mobile Payment and ICT solutions in order to
fulfil their customer requirements. Etisalat
has confirmed its reliability as a partner in
these areas in both the public and the private
sector, as the number of these projects is
increasing. At high-profile events such as
the first-ever Formula 1 Grand Prix at Yas
Island and the 2009 FIFA Club World Cup in
Abu Dhabi, all media attention turned to the
UAE. These were events of major importance
for the nation’s reputation, and highlighted
the reliance and trust both national and
international entities put in Etisalat.
Etihad Etisalat (Mobily),
Kingdom of Saudi Arabia
Several factors are driving the impressive
growth in Saudi Arabia’s telecommunication
market and its massive uptake in new services
and technologies. The two most important
are the gradual increase in competition and
the specific demographic patterns of the
Kingdom. The majority of Saudi Arabia’s
population is younger than 20 years old, a very
positive aspect when it comes to accepting
and using new services and adopting new
technologies. The massive increase in the
Saudi Arabian telecommunications industry
stems mainly from the major restructuring it
has undergone in the past few years, mainly
due to the entry of new players.
Beside the incumbent operator, Mobily
is the only operator who possesses the rights
to utilise mobile as well as fixed technologies
in Saudi Arabia, which enables bundled offers
and trend-setting services that are unique
in the market.
19
Mobily’s customer base has improved
tremendously during 2009. Its mobile broadband
subscribers exceeded 1 million making Mobily
the unchallenged No.1 in mobile broadband in
the Kingdom. In the Middle East and North
Africa region, it is the telecom operator with
the largest HSPA base and the busiest worldwide
mobile data network.
Furthermore, Mobily’s clear dedication
to a Kingdom-wide HSPA roll-out and the
introduction of innovative services had a
massive impact on the share of broadband
technologies in the country. Its share increased
from 24% to 41% from 2008 to 2009 for
HSPA versus all other available broadband
technologies. Network improvements continue
through the expansion of the most advanced
national fibre optic network in the Kingdom
of Saudi Arabia (SNFN), currently more than
12,000 km, and the Metro networks with more
than 1,000 km of fibre optic infrastructure in
all major cities of the Kingdom. The SNFN will
be the cornerstone to leverage innovative
products in order to serve Mobily’s consumer,
corporate, and wholesale customers with
the best service quality possible based on
international benchmarks.
In the marketing mix, Mobily tailored many new
products to the various demographic markets:
for example, ‘Mabuhay’ – a tailored package
for the Filipino community, and ‘Fallah’ – the
first-ever proposition for students only. For
the postpaid market 50/5 a generous offer
was made for on-net and IDD calls for a
limited time period. These two product offerings
are just a few of the tailored portfolios on offer
in the consumer segment, where content is
tailored to promote mobile content as an
addition to voice-only services. The company
works in the same dedicated manner with
business segments, encouraging them to use
technology to quickly and smoothly reach
customer segments in their respective markets.
As the fibre optic network roll-out continues,
the scene is set for new and additional
services and content being made available
in the Kingdom.
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Management Review continued
In the Middle East, and in line with Thuraya’s
strategy to focus on development agencies,
the company joined with World Bank in Jordan
to provide a number of Satellite and GSM
(SG) handheld phones to its headquarters in
the Kingdom. Following the success of the
partnership in Jordan, the World Bank continues
to utilise Thuraya phones in the region, to
facilitate financial and technical assistance
to developing countries around the world.
During 2009 a number of devastating natural
disasters affected large areas in both Asia and
Africa. As part of its support for global relief
efforts, Thuraya worked closely with the
International Telecommunication Union (ITU)
to assist in disaster recovery in Indonesia,
Bangladesh and Uganda.
Thuraya, UAE
Throughout the year a number of events took
place within Africa and Asia, where Thuraya’s
services were part of the solution or an
instrumental part of facilitating it. The United
Nations deployed a number of Thuraya IP
terminals and Thuraya Satellite Only (SO)
handheld phones to facilitate communications
in Afghanistan during the recent presidential
elections. In Mauritania and Algeria, the
Ministry of Interior and Defence used Thuraya’s
voice solutions (handhelds) as a line of
communication between different remote
regions; while in Niger, Thuraya also facilitated
the parliamentary election success with its
voice product range.
The role of Thuraya’s services expanded to
assist in a number of peacekeeping initiatives
during 2009. The company’s ability to enable
communications in remote areas meant that
Thuraya’s products were utilised in Africa to
assist the movement of troops within war zones.
Further activities in Africa during 2009
included the launch of Thuraya’s Public Calling
Office (PCO) in Zambia and Cameroon, as an
easy and affordable communication solution
for residential settlements and rural communities.
The PCO, which is a versatile, satellite-based
fixed-voice solution, addresses the need for
universal access to telecommunications, and
provides opportunities for small entrepreneurs
in rural and underdeveloped regions.
In Queensland, Australia, the Queensland
Police Service (QPS) requested extensive
demonstration to further enhance its disaster
management capabilities. The QPS decided to
deploy Thuraya’s NettedComms solution, to
accelerate the sharing of information and data
amongst the organisation’s various branches.
Overall, 2009 has been a year of significant
contribution and development. Thuraya’s value
and position as an international player in the
world’s telecom and socio-economic contexts
has gained great momentum.
Asia
Etisalat Afghanistan
Etisalat Afghanistan’s strategic intent is to
be perceived as the best quality yet affordable
service provider, as well as being a secure,
established and service-focused leader. Being
the fourth entrant in a highly competitive
environment, Etisalat Afghanistan has focused
on new subscriber acquisitions in addition to
increasing ARPU.
2009 saw Etisalat Afghanistan implementing
EDGE and GPRS technology, which opens the
door for new product offerings. In addition
the company expanded its network coverage
by adding another five provinces: Badakhshan,
Bamyan, Panjsher, Hilmand and Paktika; and
is planning to add 11 more provinces during
2010. A new Convergent Billing System was
implemented in August, through which the
company introduced additional new innovative
services and promotions.
20
For the enterprise segment, Etisalat
introduced its new postpaid plans and offers
as well as corporate services like CuG, VPN
and Bulk SMS service mainly targeted to
corporations, Non-Government Organisations,
and the UN and military segment.
In the consumer segment, three of the largest
promotions secured new subscribers with
increased ARPU. The ‘Mumtaz’ rate plan was
launched to enhance revenue. The plan was
a single flat-rate cross-net at 3.5 Afghanis
for both on-net and off-net calls. Over six
months the plan has generated over 680,000
gross additions.
The ‘Talk and Fly to Dubai’ promotion targeted
ARPU increase, where customers entered the
competition through a minimal spend of USD
3 per week during the promotion. The
promotion’s success can be seen in the
increased number of qualifying customers,
averaging 150,000 per month.
Working with the mobile arm of PTCL – Ufone
– the companies introduced a joint IDD
promotion which increased traffic and thereby
revenues for both parties. Non-performing
rate plans have been discontinued, with
customers being offered replacement plans
better aligned with their needs.
For 2010, Etisalat Afghanistan will continue its
focus on being the best quality yet affordable
service provider, strengthening brand awareness
throughout all market segments where data
offering will become an integral part of the
offer, capturing more of the high-end and
enterprise customers.
Etisalat DB Telecom Private Limited, India
Etisalat entered the Indian telecom market
through a tie-up with the Dynamix Balwas
(DB) Group in September 2008 to form Etisalat
DB Telecom Pvt Ltd. The company had licences
to offer telecom services in 15 out of 22
circles, representing 84% of the country’s
population. In most of the circles, Etisalat would
be the ninth or tenth mobile phone entrant.
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Management Review continued
Etisalat Software Solutions Private Limited,
Technologia
Technologia continues its significant role
in the development of Information and
Communication Technologies (ICT) related
projects, and has been a major contributor
to the key projects related to m-commerce
and GPON.
The Indian mobile telecom market passed 500
million connections in November 2009, which
represents an all India penetration level of
approximately 43%, and is expected to pass
70% within the next 5 years. Currently, the
market as a whole is adding around 15 million
new connections every month (GSM + CDMA).
Over 95% of the connections are prepaid,
serviced through over a million retail outlets
across the country.
Etisalat India’s model is geared towards
leveraging the inherent strengths of the local
market with the group’s international experience
and knowhow. The aim is to create an
asset-light model and significant chunks of
the implementation and ongoing operations
have been outsourced to partners such as Tech
Mahindra and Reliance Infra, bringing cost
savings, process efficiencies, and managerial
expertise to the table.
The go-to-market strategy will ensure that
network deployment will cover most of the
high revenue and profitable areas, while
capturing untapped markets at the same time.
The aim will be to attract churn as well
as new customers across markets. Leveraging
the proposed number portability regime will
be a key element in attracting profitable,
high-value customers. Consistently delivering
a high-quality network experience will be the
prime focus. Research across circles indicates
that network-related issues are by far the
most important reasons for churn among
existing customers – a major opportunity
area for Etisalat DB.
Over the year the company has strengthened its
team and knowledge base to become a
complete solutions provider. Where the in-house
knowledge is not available, Technologia has
partnered with strong companies in the market
in order to fulfil its commitments. The major
overhaul in Zantel has been completed with
very satisfactory results; since June 2009 it
has delivered and completed over 90 ICT-related
projects, closing the year with a positive result.
PT XL Axiata Tbk, Indonesia
(Formerly known as PT Excelcomindo Pratama Tbk)
XL was the first operator in Indonesia to cut
tariffs significantly in 2007, and has maintained
this position throughout 2008 and 2009. In
order to continue to offer low tariffs to
customers while outperforming industry growth,
XL has implemented lean cost management.
In accordance with XL’s 2009 theme, ‘Value
Beyond Price’, technology investments were
made in alignment with the marketing
programmes. Capital spending is now based
on lines of business instead of network
activities, which is more relevant in the
current business model.
As an example, in order to double database
capacity, Ericsson New Generation HLR FOA
(First On Air) was introduced into the network.
FOA enables the storage and management of
both database and applications with separate
devices. A Dynamic Discount System, which
recognises customers’ handsets and their usage
habit, gives XL the ability to offer more suitable
promotions. The SIM Box EIR, which is a handset
IMEI detector, is used to track and prevent fraud.
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First introduced in Sumatra and Kalimantan,
Green BTS Technology has been implemented.
This saves energy, and cuts electricity cost by
40–50% due to its low power consumption,
which also helps to keep operating expenditure
down. As a step in delivering faster data speed,
Hybrid Transmission Access was implemented,
providing two different platforms – Time Division
Multiplexing (TDM) and Internet Protocol (IP)
– in one transmission link.
During 2009 the *123# portal was launched,
allowing subscribers to switch between plans
easily, and to choose from various promotions
according to their calling habits and needs.
In addition to the two main tariffs – ‘Nelpon
Murah Sampe Puas’ (Affordable Call To Your
Heart’s Content) and ‘Nelpon Murah Berkali
Kali’ (Affordable Call as Much as You Want) –
offers were tailored for the more price-sensitive
customers switching to CDMA or using CDMA
services aside from XL.
Two new ‘cloned’ price plans were introduced
– ‘Halow Package’ (Affordable Voice Call at
20% Less Than ‘Red’), and ‘Yellow Package’
(Affordable Voice Call at 5% Less Than ‘Yellow’).
After the major earthquake in West Sumatra at
the end of September 2009, XL also launched
‘emPATI Package’ – an affordable package for
subscribers in West Sumatra. By choosing this
package, subscribers were able to make off-net
calls to the dominant market player in the area,
at the same tariff as an on-net (XL-to-XL call).
With a great response to the market offers for
BlackBerry users in Indonesia, XL had more
than 200,000 BlackBerry customers by
November 2009, making XL the No.1 brand
in BlackBerry services.
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Pakistan Telecommunications Company
Limited, PTCL, Pakistan
The PTCL group consists of PTCL, which operates
in the fixed-line segment, and Ufone, which
operates in the mobile segment. PTCL’s
strategic plans in 2009 were directed at
upholding market leadership and regaining
traditional profitability hallmarks, to improve
long-term growth and to provide significant
returns on investment.
Major strategies of the year were focused on
enhancing customer acquisitions, increasing
loyalty to fixed line, growth of broadband,
expanding the corporate customer base
and service portfolio, improving operational
efficiencies, optimising capital and operating
expenditures, and achieving improved customer
care and quality of service.
PTCL introduced bundled voice and data
packages to increase retention of fixed line
customers, and to acquire new customers. To
sustain customer retention, unlimited on-net
packages were offered without compromising
the ARPU. Bundled voice and data packages
were offered in addition to chalking out bundled
provisions with Ufone products. To reduce the
churn-out of fixed line, PTCL embarked on a
differentiation strategy, introducing a highervalue proposition instead of lowering prices
and entering price wars. It also introduced
New Telephone Connection Orders via a single
phone call, and web-based services were
introduced for ease of customer use.
Synergies with Ufone were explored for
sales and distribution, as well as products
and services. The striking international calling
rates and the significant increase in Access
Promotion Contribution resulted in improved
revenues and unprecedented growth of
international outbound calls. Numerous
value-added services, new packages in all
major product lines, and product bundles
were offered to better address the target
segment, and to conserve declining ARPUs
and mobile substitution trends.
Competing in a tight market with five
other mobile operators, Ufone maintained
its market position and increased its market
awareness to second place in Pakistan. This
was accomplished through offers such as
the Valentine Day Service, daily SMS Bucket
Offerings, UrSpace, and Ufone games. As in
many other countries, the launch of BlackBerry
products and specific related offers were also
received very positively. Increasingly Ufone
works on sustaining and improving its market
share, particularly in cross-country connections
such as the one designed with Etisalat
Afghanistan, which secured a good revenue
stream for both parties.
On the broadband front, DSL customers
spanned 170 cities and posted a tremendous
subscriber growth of 300%. This increase
was made possible because of PTCL’s strategic
decisions to double broadband speeds without
any increase in the prevailing tariffs, and
the introduction of a special 30% discount
for students.
During the year PTCL renewed its focus on the
corporate segment, where it has experienced
immense growth both in private and public
sectors, providing high-value resilient
connectivity, and sophisticated network
and communication technologies.
Plans are now focused on growing revenue by
improving the fixed subscriber base, launching
targeted new services for corporate/carrier
customers, converging with Ufone to take
advantage of synergies, capitalising on emerging
branchless banking and financial net services,
and exploring investment opportunities in
content and infotainment services.
Tigo, Sri Lanka
(a fully owned subsidiary of Etisalat)
The newest acquisition for the Etisalat group
of operators is Tigo in Sri Lanka. This is a
young, trendy and energetic predominantly
prepaid operator that has been in operation
since 2007. The acquisition is yet another step
in the strategy of seizing opportunities in
emerging markets with high growth potential.
During 2010, the Etisalat brand will be introduced
into the Sri Lankan market, basing the company
on the same strong branding platform as is
seen throughout the operations – whilst not
losing the brand footprint already in existence.
Network expansion has been prioritised based
on return on investment. One of the priorities
was the implementation of Disaster Recovery
in all Intelligent Nodes – where that
application synchronises all the data at database
level at pre-defined intervals to ensure the
same data is residing at all 3 INs.
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The decision to upgrade to Camel phase
3 for GPRS charging took away some of the
limitations set for customers, as well as
increasing flexibility and eliminating stability
issues in the media gateways – thus all
gateways were swapped. Tigo operates on
a ‘Triple A principle’, making all its products
and services ‘Accessible, Affordable & Available’
to its customers. This has resulted in steady
growth in new acquisitions, even with increased
competitive pressure from the launch of Airtel
commercial operations, free connection offers
by almost all competitors, and aggressive
price reductions.
In the proposition of ‘best value network’,
Tigo introduced per second billing, total incoming
free, lifetime bonus on each reload, and call
collector benefits to customers for the first
time in Sri Lanka – thereby avoiding direct
competition on price. This has helped to retain
profitable customers in the network, and
achieved growth in revenues during 2009
even as the fifth operator grabbed 11%
of the market share.
Propositions were offered to consumers as
part of retention schemes and attracting new
customers. The launch of ‘Call Collector’ beat
the competition, where the equivalent
of all outgoing minutes of the previous month
can be used for on-net on a given day in the
following month. This was followed by Call
Collector 2, where the equivalent of all outgoing
minutes of the previous month can be used
for one on-net number in the following month.
In 2010 the company will work to sustain its
image as the most affordable, as well as to
sustain the ‘stamp of quality’ brand in Sri Lanka.
In addition, a dynamic campaign targeting the
corporate segment (a market Tigo has not yet
entered) will be launched during the year. As
the country has now emerged from a three
decade-long civil war, the North and the East
of the country are now open for commercial
development, and this is expected to provide
a significant boost to almost all industries.
Tigo Sri Lanka also plans to invest heavily
in these regions to take advantage of the
new opportunities.
Network
Misr
Nigeria
Middle East
Etisalat, UAE
Africa
etisalat.ae
Atlantique Telecom, Moov, West Africa
Licence type
Etisalat ownership
Population
Penetration rate
EMTS – Etisalat Nigeria
Mobile, Fixed and Internet
100%
5 million
Mobile 204%
Fixed 30%
Internet 27%
Number of operators
Mobile 2
Network coverage, population
100%
etisalat.com.ng
Etihad Etisalat (Mobily), KSA
moov.com
Operational in 7 countries
Licence type
Mobile
Etisalat ownership
82%
Population
74 million
Penetration rate
43% average across all countries
Number of operators
Mobile 4-6 av. per country
Network coverage, population
65%
Canar, Sudan
canar.sd
Licence type
Etisalat ownership
Population
Penetration rate
Number of operators
Network coverage, population
Fixed
82%
42 million
35%
Fixed 2
45%
Licence type
Etisalat ownership
Population
Penetration rate
Number of operators
Network coverage, population
Zantel, Tanzania
Etisalat Misr, Egypt
zantel.com
etisalat.com.eg
Licence type
Etisalat ownership
Population
Penetration rate
Licence type
Etisalat ownership
Population
Penetration rate
Number of operators
Network coverage, population
Mobile and Internet
66%
82 million
76%
Mobile 3
98%
Mobile
40%
152 million
48%
Mobile 5
28%
mobily.com.sa
Licence type
Etisalat ownership
Population
Penetration rate
Number of operators
Network coverage, population
Mobile and Internet
27%
28 million
126%
Mobile 3
98%
Thuraya, UAE
Number of operators
Network coverage, population
24
Mobile and Fixed
51%
42 million
Mobile 38%
Fixed Line 0.4%
Mobile 6
Fixed 2
24%
thuraya.com
Licence type
Satellite telecommunication
Etisalat ownership
28%
Population
Approx. 7 billion
Number of operators
Satellite 4
Network coverage, population
59%
Network coverage, geographical
140 countries
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Afghanistan
Etisalat DB Telecom
Private Limited
Etisalat
Sri Lanka
PT XL Axiata Tbk, Indonesia
xl.co.id
Asia
Etisalat Afghanistan
etisalat.af
Licence type
Etisalat ownership
Population
Penetration rate
Number of operators
Network coverage, population
Mobile
100%
29 million
34%
Mobile 4
66%
Etisalat DB, India
Licence type
Etisalat ownership
Population
Penetration rate
Number of operators
Network coverage, population
Mobile
45%
1,600 million
43%
Mobile 12
n/a
Licence type
Etisalat ownership
Population
Penetration rate
Number of operators
Network coverage, population
Mobile
13%
240 million
78%
Mobile 11
84%
Pakistan Telecommunications
Company Limited, PTCL, Pakistan
ptcl.com.pk
Licence type
Etisalat ownership
Population
Penetration rate
Mobile, Fixed and Internet
26%
172 million
Mobile 59%
Fixed 2%
Number of operators
Mobile 6
Long distance 14
Wireless local loop 13
Local loop 32
Network coverage, population
90%
Note: 1 P ercentages of ownership, penetration rate and network coverage and population figures are rounded to the closest full digit.
2 Penetration and population data reflect the most recent public information.
25
Tigo, Sri Lanka (fully owned subsidary of Etisalat)
etisalat.lk
Licence type
Etisalat ownership
Population
Penetration rate
Number of operators
Network coverage, population
Mobile
100%
21 million
38%
Mobile 5
65%
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Management Review continued
Directory Services
Moving away from paper-based services,
Directory Services is focusing on alternatives
such as phone applications and web-based
directories for both PC and mobile internet
environments. Studies on entertaining marketing
campaigns and tailored directory services for
client segments are being done as alternative
ways of communicating with the market.
Highlights of 2009 were the launch of new
products: the compact Yellow Pages directory
and the Yellow Pages application for iPhone,
as well as revamping the website and launching
the ‘Be found’ campaign.
Ebtikar Card Systems
Etisalat Services Holding
Etisalat Services Holding (ESH) is the
holding company for the eight entities that
offer telecommunications-related (noncore) services in the UAE and the region.
During 2009, ESH has had a successful
year. In keeping with the overall strategy
of creating value through diversification
and growth, all entities showed positive
results in their separate businesses, as well
as strengthening strategic capabilities and
implementing new revenue sources.
The long-term strategy of building a
customer base with less dependence on
telecommunication companies paid off with
many new customers acquired in both the
governmental and private sectors, outside
the telecommunications arena.
Etisalat Academy
As a single source provider, Etisalat Academy’s
customers are offered a wide scope of training
and development services. Over the year, the
Etisalat Academy trained over 9,500 participants,
with a remarkable customer satisfaction
index of 83%.
The entity signed up with the ZTE University in
China as an additional learning partner to
further extend the portfolio offered, while
continuing to facilitate learning in other Etisalat
entities in both Asia and Africa.
On the home campus of the Academy,
internal projects aiming to become more
environmentally-friendly have been initiated
throughout the year. This resulted in significant
reductions, not only in carbon dioxide emissions
but also in operating costs.
Smart card manufacturer Ebtikar Card
Systems provides solutions to international
telecommunication operators, enabling
delivery of airtime and value-added services
to end users. It produces a wide variety of
GSM SIM cards, scratch cards and phone cards
for a diverse and expanding customer base.
SIM card products and services represented
53% of Ebtikar’s total revenue in 2009, an
increase of 14% in comparison to 2008. Ebtikar’s
focus on this market segment generated new
customers in the Middle East and Africa,
consolidating Ebtikar Card Systems’ position
in these regions.
An interesting project for Ebtikar was
the deployment of a recharge card solution
for the Roads & Transport Authority (RTA)
in Dubai, for the Salik Gate System.
Emirates Data Clearing House, EDCH
In 2009 Emirates Data Clearing House (EDCH)
increased its customer base by 25%, and further
strengthened its overall market position and
MENA presence. EDCH also entered the
European market, signing on Pannon in
Hungary – an important new client.
As the customer base increased, EDCH
initiated proceedings to open new facilities in
India, and opened additional facilities in the
UAE to ensure that customers in all three
continents are fully serviced at all times. EDCH
offers flexible and business-critical solutions
such as Preferred Roaming Agreement
Settlement, Interconnect Settlement, and
Optiprizer solutions.
E-Marine
E-Marine offers its services in the fields of
Marine Project Management, Consultancy,
Marine Route Survey, Cable Freight
Management & Storage, and Chartering.
In addition to the telecommunication field,
E-Marine provides a complete range of
solutions to the offshore industry.
27
E-Marine’s current area of coverage doubled
in one year, from 30,000 km of cable in 2008
to 60,000 km by the end of 2009 in the Red
Sea, Indian Ocean, and East Africa, in its
role as one of the main subsea cable
installers with top-ranking experts and
technical resources.
Working from depots at Hamriyah, Sharjah
Free Zone and Salalah, Oman enables its
vessels to reach as far as Mtunzini, South
Africa in the south, and India in the east.
In 2009 the company increased its customer
base by 25%, and doubled its cable storage
capability to meet rising demand, sustaining
its reputation for swift operations and an
excellent safety record.
E-Real Estate
Etisalat’s Real Estate unit is responsible for
Etisalat’s buildings and sites, and ensures full
optimisation and effective use of the properties.
The entity also provides property-related
services for Etisalat’s international subsidiaries
for project development and management.
E-Real Estate initiated and completed several
projects in other properties, where installing
intelligent building technologies and
energy-saving initiatives was one of the main
focuses for 2009.
Etisalat Facilities Management
Etisalat Facilities Management is one of the
leading companies providing integrated FM
solutions. It covers facilities management
operations and maintenance for hard and soft
services; facilities management consultancy
with clients in telecom, residential, educational,
commercial and hospitality sectors, data centres
and aviation, operating over 5,500 sites across
the UAE. Noted new clients in 2009 were Sharjah
International Airport, Al Bateen and Sir Baniyas
Airports, as well as the Dubai Islamic Affairs
and Charitable Department, responsible for
maintaining all mosques in Dubai.
Tamdeed Project Unit
Tamdeed covers all areas in surveying, planning,
execution, maintenance and project management
of inside plant (ISP-FOC Network), including
structure cabling (FTTH) inside buildings, and
outside plant (OSP-FOC network) fibre projects.
In 2009, Tamdeed was the main project leader
in rolling out the FTTH project across the country.
Operational growth in 2009 was in response to
the rapid changes in the marketplace, requiring
more available resources to deliver results to
their customers.
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Management Review continued
Human capital
Etisalat firmly believes in the importance
of attracting and retaining the best talent
in all its operational areas, and with
human capital of dedicated employees
across two continents, Etisalat customers
can enjoy a high standard of service from
over fifty thousand employees. Engaged
and creative teams have brought many
innovative and attractive offers to the
market place as well as ensuring the
networks run smoothly in all operations
guaranteeing high performance in both
operational and financial terms.
Etisalat strives to build its human capital to
continuously outperform its competitors.
This is achieved not only through focused
strategies and motivating individual performance
goals, but also through collaborating and
synergising across all operations.
During 2009, the entities have pursued their
dedication to continuous learning in both
external and internal training programmes,
which start from the day the employee joins
the Corporation. Orientation programmes are
offered to make sure that newcomers are fully
informed about the Corporation and what it
stands for. This ensures that the employee is
quickly and smoothly welcomed into the
workplace. Continuous training in all areas and
levels, such as in soft skills, technical training,
leadership and professional certifications is a
main focus for the HR departments.
In the UAE, leadership training and
development has continued for all managerial
staff. The Etisalat Academy, with its vast
expertise and knowledge, has become the
local training partner in nearly all operations.
In the entities of Afghanistan and Egypt,
qualifying employees also have the chance
to further their education by enrolling in MBA
programmes. Financial assistance from the
companies is offered as a way of further
increasing the pool of talent.
Aside from the formal training occasions for
all staff, cross-functional teams are being
developed. These serve to improve on-the-job
training and knowledge-sharing between
staff members. To ensure that this takes place,
the Corporation has set cross-functional Key
Performance Indicators – KPI’s for departments
and their employees, making their work more
meaningful and interesting.
Opportunities for employees to take up
positions in new operations in other countries
add to their experience and knowledge. This can
also be seen in projects that cover more than
one operation, such as the launch of special
Hajj packages for pilgrims to the Kingdom of
Saudi Arabia; in the IDD promotion between
Ufone and Etisalat Afghanistan; and in
departments such as Carrier & Wholesale,
which work for more than one operation
and in procurement deals for all entities.
In 2009, HR placed high priority on enhancing
employee benefits and working environments,
as part of its work to retain top talent across
all professions, and to recognise the
importance of human capital. Where possible,
processes have been made more efficient to
simplify organisational structures, and tasks
that are not core have been outsourced.
28
Employees are not only engaged through
training and enhanced working conditions,
but also through HR being a working partner.
As an example, Etisalat India has a formal
employee engagement platform (SMILES) which
aims for employees to ‘walk in and out with a
smile’. The programme run by the HR department
includes impromptu gatherings and celebrations
across the organisation, which strengthens the
company’s value system in an informal way.
In the UAE, the brand engagement programme
set out to engage employees through
strengthening Etisalat’s brand platform
and value system. Employees work through
their processes, analyse each other’s behaviour,
and award those who do well.
In summary, Etisalat’s group-wide practice is
to extend beyond training to the broader and
more visionary role of creating a common
culture, valuing ongoing adaptive capacity,
and building autonomy and empowerment.
29
30
In the UAE, the National Mobile Phone Recycling
Campaign (Envirofone) continues to be a
success for Etisalat. The campaign is the first
of its kind in the Middle East, and is a partnership
between Etisalat, the Telecommunications
Regulatory Authority, Enviroserve and the
UAE Ministry for Water and Environment.
Corporate Social Responsibility
Etisalat values its participation in the
community, and considers this a vital part
of its commitment and involvement in
its eighteen countries of operation. Its
projects focus on four main areas: education,
the environment, health, and sports.
As a corporation with skilled and professional
staff it is natural for Etisalat to invest in
education at a general level. It also provides
scholarships for higher education, tailoring
its initiatives to each country’s needs.
Etisalat Nigeria joined in the national
campaign, ‘Adopt-a-School’. In partnership
with local government, three schools in Lagos
State were adopted by Etisalat Nigeria and
the first phase of infrastructure renewal and
reconstruction has started.
Zantel, XL, Tigo, Etisalat Afghanistan and
Etisalat UAE worked closely with its communities,
directly donating computers and laptops as
well as providing connections and knowledgesharing centres for teachers and students.
Tigo’s ‘triple A’ policy – ‘Available, Affordable
& Accessible’ – sums up its efforts to bridge
the digital divide, and use telecommunications
not only as a communication tool but for sharing
information and knowledge.
Komputer untuk Sekolah (Computers for
Schools) is an integrated and sustainable fiveyear scheme to provide computing facilities
and internet connections in about 100
educational institutions and schools
throughout Indonesia. The target is to assist
60 schools and up to 300 students per year.
The Etisalat Merit Award Scheme in Nigeria
is awarded to students with the best grades
in Electrical/Electronic Engineering, Computer
Science and Management Sciences. To date,
300 students have benefited from the scheme
in 30 universities across the nation. In the
UAE, Etisalat signed an agreement with
Khalifa University to establish the telecom
infrastructure for the UAE Advanced Network
for Research & Education.
Etisalat will continue to work on reducing its
carbon footprint and becoming more
environmentally sustainable through reducing
energy requirements and recycling used
materials. At Etisalat Real Estate and Facility
Management Companies, projects are continually
introduced to reduce energy consumption.
Ebtikar, the card manufacturing part of Etisalat,
is successfully encouraging customers to
use paper-based top-up solutions. Other
entities are running campaigns encouraging
customers to use e-statements, as an
environmentally sound customer choice
in reducing paper consumption.
Whilst many countries are blessed with a
relatively clean and safe environment, others
are not. Projects to reverse damage, educate
people, and clean up the environment are an
active part of the sustainability agenda,
working with the governments in the
countries of operation.
In March 2009 Etisalat Misr launched a
nationwide campaign, ‘Origin of Life’ – with
a call for action to ‘Save water…Save life’. The
CSR project includes five major components
that have a direct impact on people’s lives.
The components include servicing 1,000+ water
connections, water purification stations, irrigation
projects to reduce water evaporation, and
supplying dialysis machines. This initiative has
earned Etisalat Misr acknowledgement and
recognition in Egypt and internationally,
winning the company the Global Corporate
Responsibility award for ‘Best Community
Programme’ at the Sixth CSR Summit in
Dubai. The summit committee panel called
Origin of Life ‘a strong and consistent
commitment to social responsibility’.
In both Zantel and Canar, CSR projects
concentrated on health campaigns to educate
people on avoiding and combating malaria
and HIV/AIDS, through awareness campaigns
and concerts. The Canar ‘Roll Back Malaria’
campaign, which is now in its third year, is
recognised as being of national importance in
combating malaria – the No.1 disease in Sudan.
Etisalat has always supported people with
special needs, and has demonstrated this by
sponsoring events and activities such as ‘Echo
of Silence’, a project to help people with impaired
hearing or speech to communicate and interact
with society. They are shown how to benefit
from new channels of communication, through
advanced technical programmes that give
them the same opportunities as their peers,
as well as providing them with independence
in living and working. This project provides a
special call centre where the conversation is
transferred from the caller with a hearing or
speaking impairment, and vice versa. In addition
to this, Etisalat UAE’s sole branded CSR initiative,
the ’Freedom Package’, is now in its third year.
It is customised for people with special needs
and for institutions that cater to them.
Building on the same idea, Etisalat Misr launched
the ‘Ro’ya service’, where a video contact centre
is available for those customers, allowing them
to communicate freely with specialised customer
care agents using sign language. This programme
earned Etisalat its second corporate social
responsibility award in 2009: the ‘Most
Innovative Non-Voice Service’ by CommsMEA,
as well as being awarded the ‘Most Innovative
Non-Voice Service’ by the ITP Institute.
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Management Review continued
After the devastating earthquakes in Asia,
PTCL and XL both contributed financial aid to
the large number of displaced people. Besides
installing telephone lines in the worst affected
areas, PTCL donated Rs. 10 million to the victims
of the earthquake in Balochistan, Pakistan.
Indonesia experienced two earthquakes. As
well as phone booths, XL contributed 15,000 XL
starter packs, free SMS, and other logistical
support to the on-ground organisations. The
company also set up a special SMS number
enabling customers to make SMS donations.
In these instances, as well as in the floods
that hit both Bangladesh and Uganda, Thuraya
was quickly at hand to assist humanitarian
organisations in keeping communication
channels open, in partnership with the ITU.
Sports are played and enjoyed by people all
over the world. It is one area that unites people
in enjoyment, not only through active
participation but also by being fans and
followers of great national and international
sports stars.
Local entities in all eighteen countries have
sports programmes on their national
community agenda. Cricket is the main sport
in both Afghanistan and Pakistan and is
supported by Etisalat Afghanistan and PTCL
at national and international tournaments.
One of the Egyptian national football team’s
biggest sponsors is Etisalat Misr, and in Tanzania
and the UAE, Etisalat is the main sponsor of
the national football leagues. Mobily has chosen
to sponsor one of the Saudi Arabian national
league teams - Al Hilal - as well as its school
league that involves more than 780 schools. At
the end of each year’s tournament, the top 20
players are selected to train with top international
teams such as AC Milan and Arsenal.
Etisalat’s position as an international sponsor
of FC Barcelona is by far the company’s biggest
involvement in sports. FC Barcelona is one of
the fastest-growing clubs in terms of
followers and won a record six titles including
the 2009 FIFA Club World Cup played in Abu
Dhabi. However, FC Barcelona is more than
football. The club’s firm belief in being more
than a club has in turn involved it in major
community projects. In a unique policy, the
club donates 0.7% of its ordinary income to
the FC Barcelona Foundation to set up
international cooperation programmes for
development. The team also supports UN
Millennium Development goals, as well as
pledging 1.5 million euros for the next five
years to UNICEF’s humanitarian aid programme.
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Management Review continued
The Executive Committee
The Executive Committee is appointed by the
Board of Directors in accordance with Section
20 of the Articles of Association. It is empowered
to take decisions on behalf of the Board and/
or to make certain recommendations to it
concerning particular matters.
Corporate Governance
The General Assembly
The General Assembly is composed of all
shareholders of the Corporation. 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 Assembly is also
entrusted with approving the report of the
external auditors, discussing and approving the
balance sheet and the profit and loss account
for the previous financial year, appointing
external auditors and approving the Board’s
recommendations regarding the allocation
of profit. The General Assembly exercises all
powers of the Corporation within the limits
of the law and the Articles of Association.
The Board of Directors
The Emirates Telecommunications Corporation
(Etisalat) is managed by a Board of Directors
presided over by the Chairman and consists
of eleven members, including the Chairman,
seven of whom are appointed by Presidential
Decree to represent the Federal Government
of the United Arab Emirates, and the remaining
four elected by the 40% non-government
shareholders of the Corporation. The term
of the Board of Directors is three years, as
applicable to each group of members according
to the date of their appointment or election.
The Board of Directors carries out the
Corporation’s business and for that purpose,
exercises all powers of the Corporation,
except those reserved by Law or the Articles
of Association for the General Assembly
of the Corporation.
The Executive Committee’s functions and
powers include organisational matters of the
Corporation (such as overseeing statutory,
organisational and employment matters and
corporate performance), planning and
development (overseeing development plans
and projects, and approval of the budget prior
to submission to the Board), operations
(reviews efficiency of service and lays down
policies concerning investments of surplus
funds), projects (sets the terms for the project
agreements, approves relevant tenders over
AED 50 million, and approves project overruns
and variations over AED 10 million), procurement
(approves purchases over AED 50 million),
and investments (including international
investments and expansion projects).
The Risk Management Committee
The Audit Committee
Ad hoc Committees
The Audit Committee is established as a
subcommittee of the Board of Directors. It
consists of three members, two of whom
are Board members, and the third who is an
external non-Board member, and meets at
least four times a year. The primary responsibility
of the Audit Committee is to monitor the
Corporation’s overall financial performance
and the integrity of its financial statements.
It also assesses the adequacy and application
of financial governance internal control policies
and procedures, and oversees the Corporation’s
financial risks. It also oversees and monitors
the effectiveness of the internal audit function,
and monitors the performance and independence
of the external auditors, recommending their
appointment or removal to the Board. In
fulfilling its role, the Committee maintains free
and open communications with the directors,
the external auditors, the internal auditors, and
the financial management of the Corporation.
The Board of Directors has the power under
the Articles of Association of the Corporation
to set up committees from time to time to deal
with specific business issues. During the year,
two ad hoc (or short-term) committees were
established by the Board consisting of several
of its members, whose respective terms came
to an end upon the fulfilment of the primary
functions for which they were created.
The Compensation Committee
The Compensation Committee is a
subcommittee of the Board of Directors. It is
composed of four members, including three
Board members, and a senior member of the
management team of the Corporation. The
Committee’s primary responsibility is to provide
comprehensive direction on all compensation
and beneficial matters for Etisalat’s staff. It
aims to ensure that its employment packages
are externally competitive and internally
equitable to support the Corporation’s strategy
to attract, retain and motivate a competent
and result-oriented workforce.
32
The Risk Management Committee is a
subcommittee of the Board of Directors. It
consists of two Board members, and a senior
member of the management team of the
Corporation. The main objective of this
committee is to recommend to the Board
an effective risk management strategy,
and to oversee its implementation.
The Operating Structure of the Corporation
In 2009 Etisalat implemented a group structure
to manage its international expansion strategy,
protect value from the Corporation’s United
Arab Emirates operations, secure value creation
from its seventeen international operations,
and to gain the trust of its stakeholders by
putting in place a solid structure and governance
and adherence to best practices.
At the level of the United Arab Emirates,
the Group organisation structure features two
autonomous Operating Units: Etisalat UAE Unit
(which is entrusted with provisioning Licensed
Telecom Services in the United Arab Emirates);
and the Etisalat Services Unit (a wholly owned
holding company entrusted with providing
certain non-core, non-telecom services to
the Corporation, as well as to 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 and
the Executive Committee on a regular basis.
Financial Statements
Independent auditors’ report to the shareholders
Consolidated income statement
Consolidated statement of comprehensive income Consolidated statement of financial position
Consolidated statement of changes in equity Consolidated statement of cash flows Notes to the consolidated financial statements
Notice of Meeting
33
34
35
36
37
38
39
40
77
Independent auditors’ 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 of 31 December 2009 and the consolidated
income statement, 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 notes.
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. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation
and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error; selecting and
applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.
Auditors’ 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 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.
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.
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 position of the Group
as of 31 December 2009, and of its financial performance and its cash flows for the year then ended in accordance with International Financial
Reporting Standards.
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 stores 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 its Articles of Association, which would materially affect its activities or financial position at 31 December 2009.
DELOITTE & TOUCHE
Abu Dhabi, United Arab Emirates
Saba Y. Sindaha (Reg. No. 410)
PRICEWATERHOUSECOOPERS
Abu Dhabi, United Arab Emirates
Jacques E. Fakhoury (Reg. No. 379)
22 February 2010
34
Consolidated income statement
for the year ended 31 December 2009
Notes
Revenue
Operating expenses
5
Share of results of associates and joint ventures
14, 15
Operating profit before federal royalty
Federal royalty
5
Operating profit
2009
AED’000
2008
AED’000
30,831,390
29,359,666
(13,862,132)
(14,615,414)
682,051
472,694
17,651,309
15,216,946
(8,836,346)
(8,664,984)
8,814,963
6,551,962
Gain on disposal of shares in an associate
6
-
1,783,686
Finance income
7
583,055
415,340
Finance costs
8
(571,493)
(563,786)
Profit before tax
8,826,525
Taxation
9
Profit for the year
Non-controlling interests
Profit for the year attributable to the equity holders of the Corporation
(243,792)
8,187,202
(187,007)
8,582,733
8,000,195
253,613
510,639
8,836,346
8,510,834
AED 1.23
AED 1.18
Earnings per share
Basic and diluted
36
Mohammad Hassan Omran
Chairman
Khalaf Bin Ahmed Al Otaiba
Vice Chairman
The accompanying notes on pages 40 to 76 form an integral part of these consolidated financial statements. The Independent auditors’ report is set out on pages 34.
35
Consolidated statement of comprehensive income
for the year ended 31 December 2009
2009
AED’000
2008
AED’000
8,582,733
8,000,195
Exchange differences on translation of foreign operations
Gain/(loss) on revaluation of available-for-sale investments
54,183
10,706
(183,662)
(214,587)
Other comprehensive income/(loss)
64,889
(398,249)
8,647,622
7,601,946
205,189
572,495
8,852,811
8,174,441
Profit for the year
Total comprehensive income for the year
Non-controlling interests
Total comprehensive income attributable to the equity holders of the Corporation
The accompanying notes on pages 40 to 76 form an integral part of these consolidated financial statements. The Independent auditors’ report is set out on pages 34.
36
Consolidated statement of financial position
as at 31 December 2009
Notes
As at 31 December
2009
AED’000
2008
AED’000
1 January
2008
AED’000
3,127,914
13,650,474
17,585,386
162,800
15,722,411
493,507
912,275
24,753
136,491
2,915,190
13,288,528
13,100,969
175,700
15,264,092
602,338
10,287
36,268
101,356
1,455,107
13,209,891
11,128,933
13,501,906
710,769
47,245
-
51,816,011
45,494,728
40,053,851
272,410
7,638,302
331,173
11,515
11,309,185
183,273
5,438,708
495,380
10,977
11,294,868
147,859
3,740,203
210,470
10,464
9,432,564
19,562,585
17,423,206
13,541,560
71,378,596
62,917,934
53,595,411
19,389,237
1,079,387
2,902,961
56,709
60,086
18,684,813
722,305
2,002,465
6,815
15,176,425
343,000
1,013,334
22,493
52,770
23,488,380
21,416,398
16,608,022
2,118,289
3,421,704
42,318
333,134
538,464
124,781
39,894
882,334
857,691
2,644,420
944,942
293,805
326,007
23,711
791,198
756,220
5,387,343
1,804,626
157,317
17,353
533,808
7,500,918
5,881,774
8,656,667
Total liabilities
30,989,298
27,298,172
25,264,689
Net assets
40,389,298
35,619,762
28,330,722
7,187,400
26,636,679
2,567,530
5,989,500
22,887,502
2,554,971
4,991,250
19,222,145
2,248,013
Equity attributable to the equity holders of the Corporation
Non-controlling interests
36,391,609
3,997,689
31,431,973
4,187,789
26,461,408
1,869,314
Total equity
40,389,298
35,619,762
28,330,722
Non-current assets
Goodwill
Other intangible assets
Property, plant and equipment
Investment property
Investment in associates and joint ventures
Other investments
Advances to associates
Finance lease receivables
Deferred tax asset
10
10
11
12
14, 15
16
17
18
9
Current assets
Inventories
Trade and other receivables
Due from associates and joint ventures
Finance lease receivables
Cash and cash equivalents
19
20
17
18
21
Total assets
Current liabilities
Trade and other payables
Borrowings
Payables related to investments and licences
Finance lease obligations
Provisions
22
23
24
25
26
Non-current liabilities
Trade and other payables
Borrowings
Payables related to investments and licences
Derivative financial instruments
Deferred tax liabilities
Finance lease obligations
Provisions
Provision for end of service benefits
22
23
24
27
9
25
26
28
Equity
Share capital
Reserves
Retained earnings
29
30
Mohammad Hassan Omran
Chairman
Khalaf Bin Ahmed Al Otaiba
Vice Chairman
The accompanying notes on pages 40 to 76 form an integral part of these consolidated financial statements. The Independent auditors’ report is set out on pages 34.
37
38
6,950,000
7,098,000
-
6,124,000
974,000
-
6,124,000
5,124,000
1,000,000
-
Asset
Replacement
reserve
AED’000
6,714
-
3,408
3,306
-
3,408
3,408
-
Statutory
reserve
AED’000
8,360,349
3,000,000
(998,250)
-
General
reserve
AED’000
-
272,782 12,167,505
-
267,023 10,362,099
5,759
- 3,003,306
- (1,197,900)
267,023 10,362,099
388,829
(121,806)
-
Translation
reserve
AED’000
Reserves (see note 30)
Attributable to the equity holders of the Corporation
The accompanying notes on pages 40 to 76 form an integral part of these consolidated financial statements. The Independent auditors’ report is set out on pages 34.
Balance at 31 December 2009
7,187,400
-
-
Dividends (Note 35)
6,000,000
950,000
-
5,989,500
1,197,900
Balance at 1 January 2009
Total comprehensive income for the year
Other movements in non-controlling interests
Transfer to reserves
Bonus issue of 1,197.9 million fully paid shares of AED 1
6,000,000
5,989,500
Balance at 31 December 2008
5,000,000
1,000,000
-
Development
reserve
AED’000
4,991,250
998,250
-
Share
capital
AED’000
Balance at 1 January 2008
Total comprehensive income for the year
Other movements in non-controlling interests
Transfer to reserves
Other movements in equity
Issue of written put options
Bonus issue of 998.25 million fully paid shares of AED 1
Dividends (Note 35)
for the year ended 31 December 2009
Consolidated statement of changes in equity
26,461,408
8,174,441
40,436
(3,244,312)
Total
shareholders’
equity
AED’000
2,554,971 31,431,973
2,248,013
8,510,834
(5,000,000)
40,436
(3,244,312)
Retained
earnings
AED’000
141,678
2,567,530 36,391,609
- (3,893,175) (3,893,175)
130,972 2,554,971 31,431,973
10,706 8,836,346 8,852,811
- (4,930,612)
-
130,972
345,559
(214,587)
-
Investment
Revaluation
reserve
AED’000
28,330,722
7,601,946
3,185,820
40,436
(292,600)
(3,246,562)
Total
equity
AED’000
3,997,689 40,389,298
- (3,893,175)
4,187,789 35,619,762
(205,189) 8,647,622
15,089
15,089
-
4,187,789 35,619,762
1,869,314
(572,495)
3,185,820
(292,600)
(2,250)
NonControlling
interests
AED’000
Consolidated statement of cash flows
for the year ended 31 December 2009
Notes
Operating profit
Adjustments for:
Depreciation
Amortisation
Dividend income from other investments
Share of results of associates and joint ventures
Provisions and allowances
11
10
14, 15
2009
AED’000
2008
AED’000
8,814,963
6,551,962
1,603,920
930,581
(21,121)
(682,051)
(281,922)
1,591,639
892,569
(23,497)
(472,694)
825,182
10,364,370
9,365,161
Changes in working capital:
Inventories
Due from associates and joint ventures
Trade and other receivables
Trade and other payables
(90,193)
(92,865)
(1,524,788)
1,554,219
(34,523)
(256,616)
(699,700)
2,310,047
Cash generated from operations
Income taxes paid
Payment of end of service benefits
10,210,743
(75,301)
(10,747)
10,684,369
(62,371)
(25,554)
Net cash generated from operating activities
10,124,695
10,596,444
Cash flows from investing activities
Acquisition of subsidiaries, net of cash acquired
Acquisition of associates
Acquisition of other investments
Purchases of property, plant and equipment
Proceeds on disposal of property, plant and equipment
Purchase of other intangible assets
Proceeds on disposal of shares in an associate
Dividend income received from associates & other investments
Proceeds on maturity of investments classified as held-to-maturity
Advances to associates
Finance income received
(320,391)
(9,053)
(5,546,483)
34,283
(1,251,666)
244,860
128,590
(644,916)
594,032
(231,297)
(1,779,280)
(117,619)
(3,836,802)
246,784
(71,177)
2,324,993
136,371
425,804
Net cash used in investing activities
(6,770,744)
(2,902,223)
Cash flows from financing activities
Proceeds from bank borrowings
Repayments of bank borrowings
Proceeds from other borrowings
Finance costs paid
Dividends paid
Contributions from non-controlling interests
980,104
(560,361)
451,671
(400,618)
(3,893,175)
15,089
1,994,939
(4,159,485)
180,665
(413,563)
(3,244,312)
-
Net cash used in financing activities
(3,407,290)
(5,641,756)
(53,339)
2,052,465
28
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
21
11,294,868
67,656
9,432,564
(190,161)
11,309,185
11,294,868
The accompanying notes on pages 40 to 76 form an integral part of these consolidated financial statements. The Independent auditors’ report is set out on pages 34.
39
Notes to the consolidated financial statements
for the year ended 31 December 2009
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 activity of the Group is 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 licence from the UAE Telecommunications Regulatory Authority valid until 2025), its subsidiaries,
associates and joint ventures.
These financial statements were approved by the Board of Directors and authorised for issue on 22 February 2010.
2. Significant accounting policies
The significant accounting policies adopted in the preparation of these financial statements are set out below.
Basis of preparation
The 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.
Adoption of IFRS
The consolidated financial statements of the Group for the year ended 31 December 2008 were prepared in accordance with the Group’s
previous accounting policies which are described in the audited consolidated financial statements for the year then ended. The Group’s previous
accounting policies differ in some areas from IFRS, as summarised in note 37. In preparing the financial statements, management has amended
certain accounting, valuation and consolidation methods applied in the consolidated financial statements for the year ended 31 December 2009,
to comply with IFRS. Accordingly these consolidated financial statements have been prepared in accordance with IFRS.
In accordance with the requirements of IFRS 1 (revised 2007) three statements of financial position have been presented including related
notes impacted by the transition to IFRS, as summarised in note 37. The comparative disclosures as at 1 January 2008 relate to the statement
of financial position of the Group at the date of IFRS adoption (1 January 2008) and is prepared in accordance with IFRS. The effect of adopting
IFRS at the transition date is set out in note 37. In preparing these financial statements the Group’s disclosure of related parties has been
impacted by the early adoption of the amendments to IAS 24 (revised 2009) Related Party Disclosures. This is the only standard that the Group
has early adopted that has resulted in a significant effect to the presentation and disclosure of financial information in the current period.
At the date of the consolidated financial statements, the following Standards, Amendments and Interpretations which have not been applied in
these financial statements were in issue but not yet effective:
Effective for annual periods
beginning on or after
IFRS 2 (revised 2009) Group Cash-settled Share-based Payment Transactions
IFRS 3 (revised 2008) Business Combinations
IFRS 9 Financial Instruments
IAS 27 (revised 2008) Consolidated and Separate Financial Statements
IAS 32 (revised 2009) Classification of Rights Issues
IAS 39 (revised 2008) Eligible Hedged Items
IFRIC 14 (revised 2009) Prepayments of a Minimum Funding Requirement
IFRIC 17 Distributions of Non-cash Assets to Owners
IFRIC 18 Transfers of Assets from Customers
IFRIC 19 Extinguishing Liabilities with Equity instruments
Amendments to IFRS 2, IFRS 5, IAS 21, IAS 28, IAS 31, IAS 38, IAS 39, IFRIC 9 and IFRIC 16
resulting from the 2007, 2008 and 2009 Annual Improvements to IFRSs
Amendments to IFRS 8, IAS 1, IAS 7, IAS 17 and IAS 36 resulting from the 2008 and 2009 Annual Improvements to IFRSs
1 January 2010
1 July 2009
1 January 2013
1 July 2009
1 February 2010
1 July 2009
1 January 2011
1 July 2009
1 July 2009
1 July 2010
1 January 2009/1 July 2009
1 January 2010
The directors are currently assessing the impact that the adoption of these Standards, Amendments and Interpretations will have on the
consolidated financial statements of the Group.
40
Notes to the consolidated financial statements
for the year ended 31 December 2009
2. Significant accounting policies (continued)
Basis of consolidation
These consolidated financial statements incorporate the financial statements of the Corporation and entities controlled by the Corporation up
to 31 December 2009. Control is achieved where the Group has the power to govern the financial and operating policies of an investee entity
so as to obtain benefits from its activities. 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 (previously referred to as minority 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 minority’s share of changes in equity since the date of the combination. Losses applicable to the minority in excess of the
minority’s interest in the subsidiary’s equity are allocated against the interests of the Group except to the extent that the minority has a binding
obligation and is able to make an additional investment to cover the losses.
Subsidiaries are consolidated from the date on which effective control is transferred to the Group and are excluded from consolidation from
the date that control ceases.
Intercompany transactions, balances and any unrealised gains/losses between Group entities have been eliminated in the consolidated
financial statements.
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.
Business combinations
The acquisition of subsidiaries is accounted for using the purchase 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, plus costs directly attributed
to the acquisition. The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3
Business Combinations, are recognised at their fair values at the acquisition date.
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 net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities exceeds the cost of the business
combination, the excess is recognised immediately in the consolidated income statement.
The interest of minority shareholders in the acquiree is initially measured at the minority’s proportion of the net fair value of the assets,
liabilities and contingent liabilities recognised.
Associates and joint ventures
Associates and joint ventures are those companies which the Group jointly controls or over which it exercises significant influence but it does
not control. Investments in associates and joint ventures are accounted for using the equity method of accounting. 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 an obligation to fund such losses. The carrying
values of investments in associates and joint ventures are reviewed on a regular basis and if an 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 income statement
in the year of acquisition.
The Group’s share of associates’ and joint ventures’ net income is based on the most recent financial statements or interim financial statements
drawn up to the Group’s statement of financial position date. Accounting policies of associates and joint ventures have been adjusted, where
necessary, to ensure consistency with the policies adopted by the Group.
Where a Group company transacts with an associate or joint venture of the Group, unrealised gains and losses are eliminated to the extent of
the Group’s interest in the relevant entity. 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 changes in equity.
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. 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 deferred until such time as the customer uses the airtime, or the credit expires.
41
Notes to the consolidated financial statements
for the year ended 31 December 2009
2. Significant accounting policies (continued)
Revenue (continued)
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 and recognised in line
with the Group’s performance of its obligations relating to the incentive.
In revenue arrangements including more than one deliverable, the arrangement consideration is allocated to each deliverable based on the fair
value of the individual element. 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.
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.
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.
The Group as lessee
Rentals payable under operating leases are charged to the consolidated income statement 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.
Foreign currencies
Functional currencies
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 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 for the financial statements.
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 each year end, monetary assets and liabilities that are denominated in
foreign currencies are retranslated into the entity’s functional currency at rates prevailing at the statement of financial position date. Nonmonetary 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.
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 the consolidated statement of financial position. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are
also translated at exchange rates prevailing on the statement of financial position date. 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 arising are classified as a separate component of equity. Such translation differences are recognised
as income or as expense in the period in which the operation is disposed of.
Foreign exchange differences
Exchange differences are recognised in the consolidated income statement 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 in the foreign currency translation
reserve and recognised in the consolidated income statement on disposal of the net investment.
42
Notes to the consolidated financial statements
for the year ended 31 December 2009
2. Significant accounting policies (continued)
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 income statement in the period in which they are incurred.
Government grants
Government grants relating to non-monetary assets are recognised at nominal value. Grants that compensate the Group for expenses are
recognised in the consolidated income statement 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 income statement 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 statement of financial position date.
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 period. Taxable profit differs from profit as reported in the consolidated income
statement 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
the statement of financial position date.
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 statement of
financial position liability method.
Deferred tax is calculated using relevant tax rates and laws that have been enacted or substantially enacted by the statement of financial
position 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 income statement, 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 each statement of financial position date 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.
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.
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.
Property, plant and equipment
Property, plant and equipment are stated at cost, less accumulated depreciation and any impairment. Cost comprises the cost of equipment and
materials, including freight and insurance, charges from contractors for installations and building works, direct labour costs and asset retirement costs.
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.
43
Notes to the consolidated financial statements
for the year ended 31 December 2009
2. Significant accounting policies (continued)
Property, plant and equipment (continued)
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 income during the period in which they are incurred.
Other than land, the cost of property, plant and equipment is depreciated on a straight line basis over the estimated useful lives of the
assets as follows:
Buildings
Permanent - the lesser of 20 - 50 years and the period of the land lease.
Temporary - the lesser of 4 years and the period of the land lease.
Plant and equipment
Submarine - fibre optic cables
- coaxial cables
Cable ships
Coaxial and fibre optic cables
Line plant
Exchanges
Switches
Radios/towers
Earth stations/VSAT
Multiplex equipment
Power plant
Subscribers’ apparatus
General plant
Years
20
10
15
15
15
5 – 10
5 – 10
10 – 15
5 – 10
10
5
3–8
2–5
Other assets
Motor vehicles
Computers
Furniture and fittings
Years
3–5
4–5
4 – 10
The assets’ residual values and useful lives are reviewed and adjusted, if appropriate, at each statement of financial position date.
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 consolidated income statement.
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 property in the course of construction is included in property, plant and equipment.
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
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.
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 cash-generating 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.
On disposal of a subsidiary, associate or joint venture, the attributable amount of goodwill is included in the determination of the profit or loss
on disposal.
44
Notes to the consolidated financial statements
for the year ended 31 December 2009
2. Significant accounting policies (continued)
Intangible assets (continued)
(II) Licences
Acquired telecommunication licences are initially recorded at cost or, if part of a business combination, at fair value. Licences 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 licence period, the conditions for licence renewal and
whether licences are dependent on specific technologies.
(III)Internally-generated intangible assets
An internally-generated intangible asset arising from the Group’s IT development is recognised only if all of the following conditions are met:
• 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
• the development cost of the asset can be measured reliably.
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.
(IV)Indefeasible Rights of Use (“IRU”)
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 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 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 15 years.
Impairment of tangible and intangible assets excluding goodwill
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.
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.
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.
Non-financial assets other than goodwill that suffered an 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 cash-generating 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, direct 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
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
• 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
All financial assets are recognised and derecognised on a 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.
Financial assets are classified into the following specified categories: ‘held-to-maturity’ 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.
45
Notes to the consolidated financial statements
for the year ended 31 December 2009
2. Significant accounting policies (continued)
Financial instruments (continued)
(III)Effective interest method
The effective interest method is a method of calculating the amortised cost of a financial asset 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 financial asset, or, where appropriate, a shorter period.
Income is recognised on an effective interest rate basis for debt instruments that are held-to-maturity, are available-for-sale, or are loans and
receivables.
(IV)Held-to-maturity investments
Bonds and Sukuks 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. 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 income statement.
Dividends on AFS equity instruments are recognised in the consolidated income statement 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 statement of financial position date. The foreign exchange gains/losses that are recognised in the
consolidated income statement are determined based on the amortised cost of the monetary asset. Other foreign exchange gains/losses are
recognised in equity.
The Group assesses at each statement of financial position date 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 income statement on equity instruments are not reversed through the
consolidated income statement.
(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 income statement where there is objective
evidence that the asset is impaired. The allowance recognised is measured as the difference between the asset’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 write-off 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.
(VIII) Financial liabilities
Financial liabilities are classified as either financial liabilities ‘at fair value through profit or loss’ (“FVTPL”) or other financial liabilities.
(IX)Financial guarantee contract liabilities
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 amount initially recognised less, where appropriate, cumulative amortisation recognised in accordance with the revenue recognition
policies set out above.
(X) Financial liabilities at FVTPL
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 income statement.
46
Notes to the consolidated financial statements
for the year ended 31 December 2009
2. Significant accounting policies (continued)
Financial instruments (continued)
(XI)Other financial liabilities
Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs. Other financial liabilities 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.
(XII) Derecognition of financial liabilities
The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or they expire.
(XIII) Derivative financial instruments
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.
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. The Group does not designate any financial instruments as hedging instruments, and accordingly all
resulting gains or losses arising from the remeasurement of derivatives are recognised in the consolidated income statement immediately.
(XIV) Embedded derivatives
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 income statement.
(XV) 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 noncontrolling 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.
(XVI) 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.
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
statement of financial position date, and are discounted to present value where the effect is material.
Transactions with non-controlling interests
The Group applies a policy of treating transactions with non-controlling interest holders as transactions with parties external to the Group.
Disposals to non-controlling interest holders result in gains and losses for the Group and are recorded in the consolidated income statement.
Purchases from non-controlling interest holders result in goodwill, being the difference between any consideration paid and the relevant share
acquired of the carrying value of net assets of the subsidiary.
Dividends
Dividend distributions to the Group’s shareholders are recognised as a liability in the financial statements in the period in which the dividends
are approved.
47
Notes to the consolidated financial statements
for the year ended 31 December 2009
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.
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.
The key assumptions concerning the future, and other key sources of estimation uncertainty at the statement of financial position 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.
(I) Fair value of other intangible assets
On the acquisition of mobile network operators, the identifiable intangible assets may include licences, 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 exist.
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 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) Impairment of goodwill and associates
Determining whether goodwill is impaired requires an estimation of the fair value less cost to sell of the cash-generating unit to which the
goodwill has been allocated. The fair value less cost to sell 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;
selling prices and direct costs; and
the selection of discount rates to reflect the risks involved.
(III) Property, plant and equipment
Property, plant and equipment represents 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 an asset’s expected life or its residual value would result in a reduced depreciation charge in the consolidated income statement.
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.
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 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 eighteen countries, the majority of which are considered by the Group to be one international operating segment. 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.
Segment revenues and results
Segment results represent operating profit before federal royalty and the impact of IFRS adjustments earned by each segment without
allocation of finance income and finance costs. This is the measure reported to the Group’s board of directors (“Board of Directors”) and the
Executive Committee for the purposes of resource allocation and assessment of segment performance.
48
Notes to the consolidated financial statements
for the year ended 31 December 2009
4. Segmental information (continued)
The following is an analysis of the Group’s revenue and results by reportable segment:
Consolidated
AED’000
UAE
AED’000
International
AED’000
31 December 2009
Revenue
External sales
Inter-segment sales
23,171,051
25,910
3,761,895
-
(25,910)
3,898,444
-
30,831,390
-
Total revenue
23,196,961
3,761,895
(25,910)
3,898,444
30,831,390
Segment result
Finance income
Finance costs
8,843,233
(238,213)
Eliminations
AED’000cc
Effect of
IFRS
adjustments
AED’000
66,607
143,336
8,814,963
583,055
(571,493)
Profit before tax
Taxation
8,826,525
(243,792)
Profit for the year
8,582,733
31 December 2008
Revenue
External sales
23,789,408
2,329,726
-
3,240,532
29,359,666
Inter-segment sales
28,769
-
(28,769)
-
-
23,818,177
2,329,726
(28,769)
3,240,532
29,359,666
7,481,213
(1,023,225)
89,232
4,742
6,551,962
415,340
(563,786)
1,783,686
Total revenue
Segment result
Finance income
Finance costs
Gain on disposal of shares in an associate
Profit before tax
Taxation
8,187,202
(187,007)
Profit for the year
8,000,195
49
Notes to the consolidated financial statements
for the year ended 31 December 2009
4. Segmental information (continued)
Segment assets
For the purposes of monitoring segment performance and allocating resources between segments, the Group’s Board of Directors and the
Executive Committee monitors the tangible, intangible and financial assets attributable to each segment. All assets are allocated to reportable
segments. Assets used jointly by reportable segments are allocated on the basis of the revenues earned by individual reportable segments.
2009
AED’000
2008
AED’000
2007
AED’000
64,176,768
25,525,299
58,103,966
22,164,601
51,252,695
17,227,852
Total segment assets
Eliminations
Effect of IFRS adjustments
89,702,067
(19,299,658)
976,187
80,268,567
(18,196,689)
846,056
68,480,547
(16,032,889)
1,147,753
Consolidated total assets
71,378,596
62,917,934
53,595,411
UAE
International
Other segment information
Depreciation and amortisation
2009
AED’000
UAE
International
Effect of IFRS adjustments
Eliminations
2008
AED’000
Capital additions
2009
AED’000
2008
AED’000
1,297,628
1,257,409
(18,564)
(1,972)
1,425,121
1,094,920
(33,364)
(2,469)
2,577,613
5,143,561
(57,338)
-
3,401,620
3,683,962
(131,441)
-
2,534,501
2,484,208
7,663,836
6,954,141
“Effects of IFRS adjustments” and their nature are disclosed in detail in note 37 to these consolidated financial statements”.
5. Operating expenses and federal royalty
(a) Operating expenses (before federal royalty)
2009
AED’000
Staff costs
Interconnect costs
Depreciation (Note 11)
Amortisation (Note 10)
Regulatory expenses
Other operating expenses
Total operating expenses (before federal royalty)
2008
AED’000
3,919,638
3,840,355
1,603,920
930,581
489,731
3,077,907
3,811,465
3,319,473
1,591,639
892,569
667,488
4,332,780
13,862,132
14,615,414
“Other operating expenses (before federal royalty)” include foreign exchange gains of AED 45.4 million (2008: losses of AED 99 million) and
operating lease rentals of AED 94.8 million (2008: AED 98 million).
(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%.
The federal royalty has been treated as an operating expense in the consolidated income statement 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. For the year ended 31
December 2008, the federal royalty has been calculated using the results prepared under the Corporation’s previous accounting policies.
6. Gain on disposal of shares in an associate
In the prior year the Corporation reduced its equity interest in Etihad Etisalat Company (“EEC”) which resulted in a gain of AED 1,783.7 million.
This disposal was in accordance with the Saudi Royal Decree establishing EEC.
50
Notes to the consolidated financial statements
for the year ended 31 December 2009
7. Finance income
Investment income earned on financial assets is as follows:
Interest on bank deposits and held-to-maturity financial investments
2009
AED’000
2008
AED’000
583,055
415,340
2009
AED’000
2008
AED’000
383,165
9,949
134,754
43,625
331,031
30,277
140,524
61,954
571,493
563,786
580,586
(9,093)
593,024
(29,238)
571,493
563,786
8. Finance costs
Interest on bank overdrafts and loans
Interest payable on other borrowings
Unwinding of discount on payables related to investments and licences
Other finance costs
Total borrowing costs
Less: amounts included in the cost of qualifying assets
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 the year arose on specific and general borrowing pools. Borrowing costs attributable to general borrowing pools are
calculated by applying a capitalisation rate of 7.92% (2008: 9.52%) to expenditure on such assets. Borrowing costs have been capitalised in
relation to loans by certain of the Group’s subsidiaries.
9 Taxation
Current tax expense
Deferred tax expense
2009
AED’000
2008
AED’000
50,237
193,555
17,186
169,821
243,792
187,007
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%
(2008: 0%). The table below reconciles the difference between the expected tax expense of nil (2008: nil) (based on the UAE effective tax rate)
and the Group’s tax charge for the year.
Profit before tax
Tax at the UAE corporation tax rate of 0% (2008: 0%)
Effect of different tax rates of subsidiaries operating in other jurisdictions
Current tax expense for the year
2009
AED’000
2008
AED’000
8,826,525
50,237
8,187,202
17,186
50,237
17,186
Deferred tax
Accelerated tax
depreciation
AED’000
At 1 January 2008
Charge to the consolidated income statement
Exchange differences
157,317
169,821
(1,131)
At 31 December 2008
Charge to the consolidated income statement
Exchange differences
326,007
193,555
18,902
At 31 December 2009
538,464
51
Notes to the consolidated financial statements
for the year ended 31 December 2009
9 Taxation (continued)
Deferred tax (continued)
At the 31 December 2009, the Group has unused tax losses of AED 5,428 million (2008: AED 4,488 million) available for offset against future
profits. A deferred tax asset has been recognised in respect of AED 652 million (2008: AED 435 million) of such losses. No deferred tax asset
has been recognised in respect of the remaining AED 4,776 million (2008: AED 4,053 million) due to the unpredictability of future taxable profit
streams. Included in unrecognised tax losses are losses of AED 2,137 million that will expire within the next three years, AED 1,922 million (2008:
AED 2,134 million) that will expire in the next four years and AED 717 million (2008: AED 1,919 million) that will expire within the next five years.
Other losses may be carried forward indefinitely.
10.Goodwill and other intangible assets
Goodwill
AED’000
Other intangible
assets
AED’000
Total
AED’000
Cost
At 1 January 2008
Additions
Acquired on acquisition of subsidiaries
Disposals
Exchange differences
1,455,107
1,524,473
(64,390)
-
14,245,789
40,903
1,332,858
(347,277)
(80,341)
15,700,896
40,903
2,857,331
(411,667)
(80,341)
At 31 December 2008
2,915,190
15,191,932
18,107,122
Amortisation
At 1 January 2008
-
1,035,898
1,035,898
Charge for the year
Disposals
Exchange differences
-
892,569
(56,378)
31,315
892,569
(56,378)
31,315
At 31 December 2008
-
1,903,404
1,903,404
At 31 December 2008
2,915,190
13,288,528
16,203,718
At 31 December 2007
1,455,107
13,209,891
14,664,998
At 1 January 2009
Additions
Acquired on acquisition of subsidiaries
Changes to provisional fair values (Note 31)
Disposals
Exchange differences
2,915,190
3,048
362,635
(120,726)
(32,233)
15,191,932
1,217,485
34,432
(9,006)
64,833
18,107,122
1,220,533
397,067
(120,726)
(9,006)
32,600
At 31 December 2009
3,127,914
16,499,676
19,627,590
Carrying amount
Cost
Amortisation
At 1 January 2009
Charge for the year
Changes to provisional fair values (Note 31)
Disposals
Exchange differences
At 31 December 2009
-
1,903,404
930,581
33,793
(7,637)
(10,939)
1,903,404
930,581
33,793
(7,637)
(10,939)
-
2,849,202
2,849,202
3,127,914
13,650,474
16,778,388
Carrying amount
At 31 December 2009
52
Notes to the consolidated financial statements
for the year ended 31 December 2009
10 Goodwill and other intangible assets (continued)
Other intangible assets include licences, software and IRUs having net book values of AED 12,817 million (2007: AED 12,215 million, 2008: AED
12,658 million), AED 424 million (2007: AED 506 million, 2008: AED 210 million), and AED 409 million (2007: AED 489 million, 2008: AED 420
million), respectively.
The amortisation of intangible assets has been included within operating expenditure in the consolidated income statement.
Analysis of goodwill
Goodwill acquired in a business combination is allocated, at acquisition, to the CGUs that are expected to benefit from that business
combination. The carrying amount of goodwill (all relating to operations within the Group’s International reportable segment) is allocated
as follows:
Atlantique Telecom, S.A. (“AT”)
Etisalat DB Telecom Private Limited
Canar Telecommunications Co. Limited
Etisalat Misr (Etisalat) S.A.E
Zanzibar Telecom Limited (“Zantel”)
Tigo Private Limited (“Tigo”)
2009
AED’000
2008
AED’000
2007
AED’000
1,268,474
1,242,530
337,130
28,762
44,896
206,122
1,295,217
1,086,017
337,130
151,930
44,896
-
1,073,081
337,130
44,896
-
3,127,914
2,915,190
1,455,107
Impairment
The Group tests goodwill annually for impairment or more frequently if there are indications that goodwill might be impaired. The recoverable
amounts of the CGUs are determined from fair value less cost to sell calculations. The key assumptions for the value in use calculations are:
Discount rates
The discount rates applied to the cash flows of each of the Group’s operations are based on an external third party study conducted by the
Group’s bankers. The study utilised market data and information from comparable listed mobile telecommunications companies and where
available and appropriate, across a specific territory. The rates use a forward looking equity market risk premium and range between 8% and
22% (2007 and 2008: 10% and 22%).
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. These cash flows are sometimes extrapolated beyond this period, up to a maximum of ten years, based on estimated growth
rates of between 4% and 5% (2007 and 2008: 4% and 5%) and/or an exit EBITDA multiple of between 7 to 9 times (2007 and 2008: 7 to 9 times)
in the terminal year. This rate does not exceed the average long-term growth rate for the relevant markets. Cash flows incorporate management
fees and roaming synergies to be realised from each location.
Capital expenditure
The cash flow forecasts for capital expenditure are based on past experience and include the ongoing capital expenditure required to roll out
networks in emerging markets, to provide enhanced voice and data products and services and to meet the population coverage requirements of
certain licences of the Group. Capital expenditure includes cash outflows for the purchase of property, plant and equipment and computer software.
Selling prices and direct costs
Changes in selling prices and direct costs are based on past practices and expectations of future changes in the market.
Reasonable changes to these assumptions would not cause the aggregate of the units’ carrying amounts to exceed the aggregate of their
recoverable amounts.
53
Notes to the consolidated financial statements
for the year ended 31 December 2009
11.Property, plant and equipment
Plant and
equipment
AED’000
Buildings
AED’000
Motor
vehicles,
computers,
furniture
AED’000
Assets
Under
construction
AED’000
Total
AED’000
Cost
At 1 January 2008
Additions
Acquisition of subsidiaries
Transfers
Transfer - investment property
Exchange differences
Disposals
3,004,506
7,208
449,029
(181,000)
413
(11,720)
16,405,016
1,261,412
1,179,991
(34,364)
(240,902)
1,600,461
84,452
1,492
95,240
(2,594)
(23,589)
2,862,244
2,681,955
19,388
(1,724,260)
(13,308)
23,872,227
4,035,027
20,880
(181,000)
(36,545)
(289,519)
At 31 December 2008
3,268,436
18,571,153
1,755,462
3,826,019
27,421,070
Accumulated depreciation
At 1 January 2008
Charge for the year
Transfer - investment property
Exchange differences
Disposals
1,581,352
157,128
(5,300)
(11,438)
9,992,722
1,277,459
33,203
(8,083)
1,169,220
157,052
(23,214)
-
12,743,294
1,591,639
(5,300)
33,203
(42,735)
At 31 December 2008
1,721,742
11,295,301
1,303,058
-
14,320,101
At 31 December 2008
1,546,694
7,275,852
452,404
3,826,019
13,100,969
At 31 December 2007
1,423,154
6,412,294
431,241
2,862,244
11,128,933
Cost
At 1 January 2009
Additions
Acquisition of subsidiaries
Transfers
Transfer - investment property
Exchange differences
Disposals
3,268,436
7,946
921
80,215
5,400
8,720
(1,604)
18,571,153
583,876
483,992
2,181,289
(464)
(263,247)
1,755,462
32,056
23,512
287,060
1,920
(45,032)
3,826,019
4,847,077
82,872
(2,548,564)
21,978
(38,271)
27,421,070
5,470,955
591,297
5,400
32,154
(348,154)
At 31 December 2009
3,370,034
21,556,599
2,054,978
6,191,111
33,172,722
Accumulated depreciation
At 1 January 2009
Charge for the year
Transfer - investment property
Exchange differences
Disposals
1,721,742
165,212
(7,500)
(677)
(4,134)
11,295,301
1,208,367
1,568
(198,400)
1,303,058
230,341
(1,431)
(126,111)
-
14,320,101
1,603,920
(7,500)
(540)
(328,645)
At 31 December 2009
1,874,643
12,306,836
1,405,857
-
15,587,336
1,495,391
9,249,763
649,121
6,191,111
17,585,386
Carrying amount
Carrying amount
At 31 December 2009
The carrying amount of the Group’s buildings includes a nominal amount of AED 1 (2007 and 2008: AED 1) in relation to land granted to the
Group by the Government. An amount of AED 9 million (2008: AED 29 million) is included in property, plant and equipment on account of
capitalisation of borrowing costs for the year. There are no contingencies attached to this grant and as such no additional amounts have been
included in the consolidated income statement or the consolidated statement of financial position in relation to this.
Borrowings are secured against property, plant and equipment with a net book value of AED 2,511 million (2008: AED 1,864 million).
12.Investment property
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 assets in the consolidated statement of financial position.
54
Notes to the consolidated financial statements
for the year ended 31 December 2009
12.Investment property (continued)
AED’000
Cost
Transfer from property, plant and equipment
181,000
At 31 December 2008
Transfer to property, plant and equipment
181,000
(5,400)
At 31 December 2009
175,600
Accumulated depreciation
Transfer from property, plant and equipment
5,300
At 31 December 2008
Charge for the year
Transfer to property, plant and equipment
5,300
7,772
(272)
12,800
At 31 December 2009
Carrying amount
At 31 December 2009
162,800
At 31 December 2008
175,700
Fair value
At 31 December 2009
212,307
At 31 December 2008
261,151
The fair value of the Group’s investment property at 31 December 2009 has been arrived at on the basis of a valuation carried out by internal
valuers that are not independent from the Corporation.
The property rental income earned by the Group from its investment property, all of which is leased out under operating leases, amounted to
AED 38.1 million (2008: AED 18.0 million).
13.Subsidiaries
The Group’s principal subsidiaries at 31 December 2009 and 31 December 2008 were as follows:
Percentage
shareholding
Name
Country of incorporation
Principal activity
Emirates Telecommunications and Marine
Services FZE
Emirates Cable TV and Multimedia LLC
Etisalat International Pakistan LLC
Jebel Ali Free Zone, Dubai
Telecommunications services
100%
UAE
UAE
100%
90%
Etisalat International Egypt LLC
Etisalat International Afghanistan Limited
E-Marine PJSC
EDCH FZE
Etisalat Services FZE
Etisalat Services Holding LLC
Etisalat Software Solutions (Private) Limited
Etisalat International Atlantique Limited
Etisalat International Zantel Limited
Canar Telecommunications Co. Limited
Etisalat International Nigeria Limited
UAE
Jebel Ali Free Zone, Dubai
UAE
Jebel Ali Free Zone, Dubai
Jebel Ali Free Zone, Dubai
Abu Dhabi
India
Jebel Ali Free Zone, Dubai
Jebel Ali Free Zone, Dubai
Republic of Sudan
Jebel Ali Free Zone, Dubai
Etisalat International India Limited
Etisalat International Indonesia Limited
Jebel Ali Free Zone, Dubai
Jebel Ali Free Zone, Dubai
Etisalat International Benin Limited
* Etisalat International Sri Lanka Limited
Jebel Ali Free Zone, Dubai
Jebel Ali Free Zone, Dubai
Cable television services
Holds investment in Pakistan Telecommunication
Company Ltd
Holds investment in Etisalat Misr
Holds investment in Etisalat Afghanistan
Submarine cable activities
Data management services
Management services
Infrastructure services
Technology solutions
Holds investment in Atlantique Telecom S.A.
Holds investment in Zanzibar Telecom Ltd
Telecommunications services
Holds investment in Emerging Market
Telecommunications Services Ltd through its
shareholding in MDC NG B.V.
Holds investment in Etisalat DB Telecom Private Ltd
Holds investment in PT XL Axiata TBK (formerly
known as PT Excelcomindo Pratama TBK)
Holds investment in Etisalat Benin
Holds investment in Tigo Private Ltd through its
shareholding in Sark Corporation N.V.
* Subsidiary acquired during the year ended 31 December 2009 (Note 31).
55
100%
100%
100%
100%
100%
100%
100%
100%
100%
82%
100%
100%
100%
100%
100%
Notes to the consolidated financial statements
for the year ended 31 December 2009
13.Subsidiaries (continued)
The Group owns 45% of the share capital of Etisalat DB Telecom Private Limited Group through its 100% holding in Etisalat International India Limited
(through its 100% holding of Etisalat International Mauritius Ltd). The Group accounts for the investment as a subsidiary as it exercises control.
14.Investments in associates
The movement in the Group’s investments in associates is as follows:
AED’000
Net book amount at 1 January 2008
Additions during the year
13,451,906
1,809,656
Dividends
(74,293)
Disposal of interest in an associate
(541,307)
Gain on increase in investment in an associate
40,436
Share of results
475,693
15,162,091
Net book amount at 31 December 2008
Share of results
684,131
Dividends
(223,732)
15,622,490
Net book amount at 31 December 2009
The Group’s associates at 31 December 2009 are as follows:
Percentage
shareholding
Name
Country of incorporation
Principal activity
Pakistan Telecommunication Company Limited (“PTCL”)
Etihad Etisalat Company
Pakistan
Saudi Arabia
Telecommunications services
Telecommunications services
26%
27%
Thuraya Telecommunications Company PJSC (“Thuraya”)
PT XL Axiata TBK (“PEPT”)
Emerging Markets Telecommunications Services
Limited (“EMTS”)
UAE
Indonesia
Nigeria
Satellite communication services
Telecommunications services
Telecommunications services
28%
13%
40%
The latest set of consolidated financial statements used to assess the carrying value of the investment in PTCL is for the year ended 30 June
2009. The remaining period for PTCL has been assessed using unaudited interim consolidated financial information.
2009
AED million
Aggregated amounts relating to Associates
Total assets
Total liabilities
2008
AED million
2007
AED million
58,280
(35,902)
50,639
(31,997)
41,414
(24,648)
Net assets in associates
22,378
18,642
16,766
Total revenue
23,041
19,737
16,502
3,303
1,415
2,460
Total profit of associates
The aggregation above comprises the results and financial position of all associated undertakings as at 31 December 2009, with the exception
of PTCL whose results and financial position for the year ended 30 June 2009 have been included.
Net book amount is represented by the following investments:
i. Pakistan Telecommunication Company Limited
56
2009
AED’000
2008
AED’000
2007
AED’000
9,443,491
9,405,333
9,268,941
Notes to the consolidated financial statements
for the year ended 31 December 2009
14.Investments in associates (continued)
During 2006, the Corporation, through its majority owned subsidiary Etisalat International Pakistan LLC (“EIP”), acquired the entire 1.326 billion
Class B shares of PTCL for a total consideration of US$ 2,598,960,000 (AED 9,548,579,040). These Class B shares represent 26% of PTCL’s issued
capital and, in accordance with PTCL’s Articles of Association, provide the Corporation with 53% of the voting rights. Under the terms of the
Shareholders Agreement between EIP and the Government of Pakistan (“GOP”), EIP has the right to appoint five of the nine Board of Directors
of PTCL in addition to the appointment of certain key management personnel. However, management believes that there are certain control
impediments, including but not limited to restrictions on the Corporation’s financial and operating decision making ability, and because of these,
PTCL has been accounted for as an associate using the equity method. Management believes that some or all of these control impediments may
be alleviated in the future which may result in the consolidation of PTCL.
ii. Etihad Etisalat Company
2009
AED’000
2008
AED’000
2007
AED’000
3,580,503
2,899,041
2,123,415
The Corporation is one of seven founding shareholders of a Saudi Arabian joint stock company which was incorporated on 14 December 2004.
EEC owns and operates a mobile cellular network in the Kingdom of Saudi Arabia using GSM and 3G networks.
According to the requirements of the Communications and Information Technology Commission (“CITC”) in Saudi Arabia, the Corporation as
the operator of EEC must maintain a 15% equity interest in EEC for the duration of the management agreement (Note 17). The corporation has
27.459% equity interest in EEC at 31 December 2009. (2008: 27.459%; 2007: 35%)
The market value of the Corporation’s shares in EEC at 31 December 2009 was AED 8,225 million (2008: AED 5,823 million, 2007:
AED 12,798 million).
iii. Thuraya Telecommunications Company (formerly known as “Thuraya Satellite
Telecommunications Company PJSC”)
2009
AED’000
2008
AED’000
2007
AED’000
446,565
504,244
449,630
The Corporation holds a 28.042% interest in Thuraya which is incorporated in the UAE as a private joint stock company.
iv. PT XL Axiata Tbk (formerly known as PT Excelcomindo Pratama TBK)
2009
AED’000
2008
AED’000
2007
AED’000
1,700,292
1,612,399
1,609,920
On 12 December 2007, the Group acquired 15.97% of the issued equity shares in PEPT, a GSM operator in Indonesia, for consideration of
AED 1,610 million. As a result of a rights issue made by PT XL Axiata Tbk during the year, the Group reduced its shareholding to 13.31% at 31
December 2009 (2008: 15.97%). The Group is in the process of acquiring these shares back.
Although the Corporation holds 13.31% of the paid-up capital of PEPT, it exercises significant influence by virtue of its representation on the
Board of Directors of this Company. Accordingly, PEPT is accounted for as an associate.
Although the shares of PEPT are listed, trading in the shares is minimal, therefore the market value of AED 854 million (2008: AED 358 million) at
31 December 2009 does not represent the fair value to the Group.
(v) Emerging Markets Telecommunications Services Ltd
2009
AED’000
2008
AED’000
2007
AED’000
451,639
741,074
-
On 11 February 2008, the Group acquired a 40% interest in MDC-NG B.V., a company registered in the Netherlands. The primary business of
MDC-NG B.V. is to hold the investment in EMTS, an entity incorporated in Nigeria. Consideration of AED 969.94 million was paid which relates to
the purchase of shares in MDC-NG B.V. and assignment of the right to receive 40% of the loan provided by Mubadala Holdings Cyprus Limited
to MDC-NG B.V amounting to AED 1,176 million. EMTS has been granted a Unified Access Service Licence by the Nigerian Communications
Commission. The capital structure of EMTS has not yet been finalised. Upon finalisation this may result in the reclassification of a portion of this
investment in an associate to long term advances or loans.
57
Notes to the consolidated financial statements
for the year ended 31 December 2009
15.Investments in joint ventures
The movement in the Group’s investments in joint ventures is as follows:
2009
AED’000
102,001
(2,080)
Net book amount at 1 January
Additions during the year
Share of results
99,921
Net book amount at 31 December
2008
AED’000
50,000
55,000
(2,999)
102,001
The Group’s joint ventures at 31 December 2009 are as follows:
Name
Country of incorporation
Ubiquitous Telecommunications Technology LLC UAE
Smart Technology Services DWC – LLC
Percentage
shareholding
Principal activity
DWC free zone, Dubai,UAE
Installation and management
of network systems
ICT services
50%
50%
2009
AED’000
2008
AED’000
Aggregated amounts relating to joint ventures
Group’s share of current assets
40,445
55,056
Group’s share of non-current assets
64,734
56,783
Group’s share of current liabilities
(5,258)
(9,838)
Group’s share of net assets in joint ventures
Group’s share of income in joint ventures
99,921
6,112
102,001
Group’s share of expenditure in joint ventures
(8,192)
(10,246)
Group’s share of results in joint ventures (loss)
(2,080)
(2,999)
7,247
Net book amount is represented by the following investments:
(i) Ubiquitous Telecommunications Technology LLC
2009
AED’000
2008
AED’000
59,899
56,665
The Corporation and Seven Emirates for Investment and International Trade LLC entered into a Memorandum of Association to set up Ubiquitous
Telecommunications Technology LLC. The objectives of the company include installing infrastructure and managing home network systems.
(ii) Smart Technology Services DWC – LLC
2009
AED’000
2008
AED’000
40,022
45,336
On 3 May 2007, the Corporation entered into an agreement with Dubai Aviation Corporation to establish a joint venture company to offer
a range of non-regulated ICT services and to own an Open Access Network within Dubai World Central (“DWC”). On 23 September 2008, the
Corporation contributed an amount of AED 55 million towards its 50% equity interest in Smart Technology Services DWC - LLC. The joint
venture was incorporated in Dubai as a DWC - free zone company on 25 September 2008.
16.Other investments
2009
AED’000
2008
AED’000
2007
AED’000
345,995
335,289
490,329
Other investments classified as available-for-sale
55,662
46,609
-
Bonds and Sukuks bonds classified as held-to-maturity
91,850
220,440
220,440
493,507
602,338
710,769
Investments in equities classified as available-for-sale
58
Notes to the consolidated financial statements
for the year ended 31 December 2009
16.Other investments (continued)
The shares included above represent investments in listed equity securities that present the Group with opportunity for return through dividend
income and fair value gains. These shares are not held for trading and accordingly are classified as available-for-sale. The fair values of all equity
securities are based on quoted market prices.
Sukuks are bonds structured to conform with the principles of Islamic Sharia law.
The movement in the Group’s other investments is as follows:
AED’000
Net book amount at 1 January 2008
Investment revaluation and additions
710,769
(108,431)
Net book amount at 31 December 2008
Investment revaluation and additions
602,338
Proceeds on maturity of investments classifieds as held-to-maturity
(128,590)
Net book amount at 31 December 2009
493,507
19,759
Net book amount is represented by the following investments:
(i) Qatar Telecom QSC
2009
AED’000
2008
AED’000
2007
AED’000
211,493
172,920
235,000
The total number of shares held by the Corporation at the end of the year was 1,466,666 (2007: 1,000,000 and 2008: 1,466,666) shares.
(ii) Sudan Telecommunications Company Limited
2009
AED’000
2008
AED’000
2007
AED’000
125,827
152,341
238,000
This represents the Corporation’s investment in 38.60 million (2007 and 2008: 29.24 million) shares (4%, 2007 and 2008: 4% holding) in Sudan
Telecommunications Company Limited, Sudan.
(iii) Dubai Global Sukuk FZCO
2009
AED’000
2008
AED’000
2007
AED’000
-
128,590
128,590
This represents the Corporation’s investment of US$ 35 million in certificates (Sukuk Al-Ijara) issued by the Government of Dubai, Department
of Civil Aviation. These certificates yielded an annual rental in relation to six month US$ LIBOR plus 0.45% and matured in November 2009.
(iv) Wings FZCO
2009
AED’000
2008
AED’000
2007
AED’000
91,850
91,850
91,850
This represents the Corporation’s investment of US$ 25 million in Trust Certificates (Sukuk Al- Musharaka) issued by Wings FZCO, a limited
liability company incorporated in Dubai Airport Free Zone. These certificates bear a return based on US$ LIBOR plus 0.75% and mature in June
2012. The first distribution was made in June 2006 based on 12 months US$ LIBOR.
Further distributions are made every six months based on six months US$ LIBOR. The Sukuk Al-Musharaka is guaranteed by the Emirates Group.
The approximate market value of these certificates at 31 December 2009 was AED 78.9 million (2008: AED 68.9 million).
(v) Bank of Khartoum
2009
AED’000
2008
AED’000
2007
AED’000
6,306
7,550
10,356
This represents the Corporation’s investment in 3.2 million (2007 and 2008: 2.5 million) shares in the Bank of Khartoum (formerly known as
Emirates-Sudan Bank).
59
Notes to the consolidated financial statements
for the year ended 31 December 2009
16. Other investments (continued)
(vi) New ICO Global Communications (Holdings)
2009
AED’000
2008
AED’000
2007
AED’000
2,369
2,478
6,973
The Corporation had held a 7.34% interest in ICO Global Communications (Holdings) Limited (“ICO”), which filed for bankruptcy protection under
Chapter 11 of the United States Bankruptcy Code in August 1999. Upon gaining exit from Chapter 11 in May 2000, ICO was re-established as
New ICO Global Communications (Holdings) Limited (“New ICO”) under the laws of Delaware, USA. New ICO has been listed on the NASDAQ
stock market in New York. The Corporation holds 596,864 (2007 and 2008: 596,864) Class A shares (0.30%, 2008: 0.30% interest) in New ICO.
vii. Other investments
Classified as available-for-sale
Telecel Faso
Etisalat Misr investment
2009
AED’000
2008
AED’000
2007
AED’000
54,261
1,401
43,537
3,072
-
55,662
46,609
-
Other investments held by the Corporation’s subsidiaries include Telecel Faso (see below) and an investment by Etisalat Misr.
Due to a conflict between a subsidiary of AT (Telecel Faso) and its minority shareholder, AT has temporarily lost control over the subsidiary based
on the decision made by the jurisdiction authorities. Accordingly this has been deconsolidated from the date AT ceased to exercise control. The
matter is currently under arbitration.
17. Related party transactions and balances
Transactions between the Corporation and its subsidiaries, which are related parties, have been eliminated on consolidation and are not
disclosed in this note. Transactions between the Group and its associates are disclosed below.
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 Investment Authority with effect from 1 January 2008, which is ultimately controlled by the UAE Federal
Government. The Group provides telecommunication services 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. At 31 December
2009, trade receivables include an amount of AED 398 million (2008: AED 198 million), receivable from Federal Ministries and local bodies. See
note 5 for disclosure of the royalty payable to the Federal Government of the 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.
The Corporation entered into the following significant related party transactions with joint ventures and associates:
(i) Etihad Etisalat Company
Pursuant to the Communications CITC’s licensing requirements, EEC (then under incorporation) entered into a management agreement (“the
Agreement”) with the Corporation as its operator from 14 August 2004. The Corporation charged an amount of AED 63.9 million (2008: AED 78
million) for 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 EEC serves a 6 month notice of termination prior to the expiry of the applicable period. Amounts owed by EEC to the
Group at 31 December 2009 are AED 84.2 million on account of voice traffic and leased circuit services.
(ii) Thuraya Telecommunications Company PJSC
The Corporation has provided a primary gateway facility to Thuraya including maintenance and support services. A total amount of AED 29.4
million (2008: AED 21 million) was charged to Thuraya for the use of this facility and other services. Amounts owed to Thuraya by the Group at
31 December 2009 are AED 26.3 million on account of voice traffic and leased circuit services.
(iii) Pakistan Telecommunication Company Limited
Pursuant to the shareholders agreement entered into between Etisalat International Pakistan and the Government of Pakistan dated 12 April
2006, the Corporation entered into an agreement for the provision of technical services and know-how (“the PTCL Agreement”) with PTCL with
effect from 10 October 2006. Under the terms of the PTCL Agreement, the Corporation is entitled to an annual service fee of 3.5% of the gross
consolidated revenue of PTCL for that year. The Agreement is valid for a period of 5 years and limits the fee to US$ 50 million per annum. During
the current year service fee income of AED 124 million (2008: AED 143 million) was recognised in the consolidated income statement. Amounts
owed to PTCL by the Group at 31 December 2009 are AED 64.7 million on account of voice traffic and leased circuit services.
(iv) Emerging Markets Telecommunications Services Ltd
The Corporation has paid an amount of AED 645 million (2008: AED 257 million) to EMTS as advance and an amount of AED 96.42 million was
charged as annual management fees, fees for staff secondments and other services. Amounts owed by EMTS to the Group at 31 December 2009
are AED 3.4 million on account of voice traffic and leased circuit services.
60
Notes to the consolidated financial statements
for the year ended 31 December 2009
17. Related party transactions and balances (continued)
Trading transactions
Balances with associates and joint ventures at 31 December 2009 are disclosed below:
Associates
Amounts owed by related parties
Joint ventures
2009
AED’000
2008
AED’000
2009
AED’000
2008
AED’000
1,242,894
505,588
554
79
The amounts outstanding are unsecured and will be settled in cash. No guarantees have been given or received. No provisions have been made
for doubtful debts in respect of the above balances.
Remuneration of key management personnel
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.
2009
AED’000
2008
AED’000
51,123
61,520
2009
AED’000
2008
AED’000
2007
AED’000
Amounts receivable under finance leases:
Minimum lease payments:
Within one year
In the second to fifth years inclusive
13,294
26,588
13,294
39,882
13,294
53,176
Less: unearned finance income
39,882
(3,614)
53,176
(5,931)
66,470
(8,761)
Present value of minimum lease payments receivable
36,268
47,245
57,709
Present value of minimum lease payments:
Within one year (current)
In the second to fifth years inclusive (non-current)
11,515
24,753
10,977
36,268
10,464
47,245
36,268
47,245
57,709
Short-term benefits
18.Finance lease receivables
The Group holds a finance lease arrangement in relation to building and installations in the UAE leased out to Thuraya Telecommunications
Company PJSC, an associate of the Group.
The interest rate inherent in the leases is fixed at the contract date for all of the lease term. The average effective interest rate contracted
approximates to 4.9% per annum (2007 and 2008: 4.9% per annum).The directors consider that the carrying amount of the Group’s finance
lease receivables approximates to their fair value.
19.Inventories
Subscriber equipment
Maintenance and consumables
61
2009
AED’000
2008
AED’000
171,482
100,928
82,834
100,439
272,410
183,273
Notes to the consolidated financial statements
for the year ended 31 December 2009
20.Trade and other receivables
2009
AED’000
2008
AED’000
Amount receivable for the services rendered
Allowance for doubtful debts
4,130,137
(865,995)
3,818,040
(1,318,983)
Amounts due from other telecommunication administrations
Prepayments
Accrued income
Other debtors
3,264,142
2,185,098
293,675
206,254
1,689,133
2,499,057
1,876,939
241,543
233,568
587,601
7,638,302
5,438,708
The Group’s credit period ranges between 30 and 120 days (2008: 30 and 120 days).
The Group provides for all past due trade receivables and as such there were no past due receivables not considered for impairment as at 31
December 2009. Out of the past due receivables of AED 2,900 million (2008: AED 2,669 million), the Group provided for an amount of AED 865
million (2008: AED 1,319 million) based on its assessment of the credit quality of the amounts due. It was assessed that a portion of the past
due receivables is expected to be recovered.
The other classes within trade and other receivables do not contain any impaired amounts.
No interest is charged on the receivables. With respect to the amount receivable from the services rendered the Group holds AED 295 million
(2008: AED 281 million) of collateral in the form of cash deposits from customers.
Movement in allowance for doubtful debts
Opening balance as at 1 January
Net (decrease)/increase in allowance for doubtful debts
Closing balance as at 31 December
2009
AED’000
2008
AED’000
1,318,983
(452,988)
778,410
540,573
865,995
1,318,983
2009
AED’000
2008
AED’000
11,309,185
11,294,868
21.Cash and cash equivalents
Cash and cash equivalents
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. The carrying amount of these assets approximates to their fair value.
Interest is earned on these deposits at prevailing market rates. Cash and cash equivalents include an amount of AED 1,892 million (2008: AED
2,616 million) representing bank and cash balances of the Corporation’s subsidiaries maintained overseas.
22.Trade and other payables
Included within current liabilities:
Federal royalty
Trade payables
Amounts due to other telecommunication administrations
Deferred revenue
Other payables
Included within non-current liabilities:
Trade payables
Other payables
62
2009
AED’000
2008
AED’000
8,836,346
2,205,041
1,484,563
987,913
5,875,374
8,664,984
2,623,483
1,637,545
839,960
4,918,841
19,389,237
18,684,813
1,796,728
321,561
840,080
17,611
2,118,289
857,691
Notes to the consolidated financial statements
for the year ended 31 December 2009
22.Trade and other payables (continued)
Amounts due to other telecommunication administrations and trade and other payables, principally comprising of amounts outstanding for
trade purchases and ongoing costs are expected to be settled within 12 months of the statement of financial position date. Federal royalty for
the year ended 31 December 2009 is paid on a monthly basis to the Ministry of Finance and Industry, UAE after the first quarter of 2010.
Trade and other payables disclosed under non-current liabilities are due for settlement after one year from the statement of financial position
date.
23Borrowings
a) Bank borrowings
The carrying value and estimated fair value of the Group’s bank borrowings (measured at amortised cost) are as follows:
Fair value
2009
AED’000
Bank overdrafts
Bank loans
Carrying value
2008
AED’000
2009
AED’000
2008
AED’000
85,916
3,067,850
64,530
2,473,835
85,916
2,829,341
64,530
2,306,086
3,153,766
2,538,365
2,915,257
2,370,616
The fair values of the Group’s bank borrowings are calculated using discounted cash flows using an appropriate discount factor that includes
credit risk.
(i) Bank overdrafts
Zantel has an amount of AED 24.6 million (2008: AED 64.5 million) representing a bank overdraft which is utilised for the purpose of nonoperating activities. The remainder of the balance (AED 61.3 million) relates to overdraft balances held by Atlantique Telecom.
(ii) Bank loans
On 17 July 2006, the Corporation entered into an agreement for a line of credit from a consortium of 22 banks amounting to US$ 3 billion. The
Corporation repaid the outstanding loan balance under this facility amounting to AED 2,755 million on 14 July 2008. Accordingly, all borrowings
as at 31 December 2009 are held by the Group’s subsidiary entities, as discussed below.
Etisalat Misr signed an agreement for syndicated interest bearing loans on 13 December 2007, for:
• a long term loan facility amounting to LE 2 billion (AED 1.4 billion) (Portion A);
• a revolving credit facility amounting to LE 1.0 billion (AED 0.7 billion) (Portion B); and
• a long term loan facility amounting to US$ 300 million (AED 1,102 million)(Portion C).
The syndicated loan is repayable in full on 13 January 2011. The syndicated loan bears interest at mid-corridor plus 0.5% for the Egyptian Pound
Portion and LIBOR plus 0.75% for the US Dollar Portion. Etisalat Misr utilised an amount of AED 595.4 million (2008: AED 468.1 million) from
Portion A and AED 1,102 million (2008: AED 1,102 million) from Portion C and is included in non-current borrowings. The syndicated loan is
secured by a commercial mortgage over Etisalat Misr’s property, plant and equipment a pledge over its bank accounts, real estate mortgage and
an insurance assignment.
Zantel has a number of loans totalling AED 499.3 million (2008: AED 70 million), of which AED 271.7 million (2008: nil) is due within one
year. Loans obtained at fixed rates carry interest at rates of 14.0% (2008: 14.5% per annum) (reducing balance), whereas the loans obtained
at variable rates carry interest ranging from US LIBOR plus 4.5% to 5.5% per annum (2008: 2.75% to 5.5% per annum). Bank borrowings are
secured by a fixed and floating charge over the company’s property, plant and equipment, both present and future, including a charge over the
escrow accounts.
Atlantique Telecom has Euro denominated loans of AED 667.2 million (2008: AED 525 million). AED 559 million of the loan relates to short
term borrowings which are repayable in December 2010. The short term loan has a floating interest rate of EURIBOR plus 8.72%. The remaining
borrowings comprise overdrafts of AED 61.3 million (fixed interest of 11.0 – 14.8%) as well as short term loans of AED 16.2 million and a noncurrent loan of AED 30.8 million, which bear a fixed rate of interest of 10.0%.
2009
AED’000
Maturity of bank borrowings
The borrowings are repayable as follows:
On demand or within one year
In the second year
In the third to fifth years inclusive
2008
AED’000
956,360
2,269,330
-
740,999
67,469
1,820,924
3,225,690
2,629,392
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.
63
Notes to the consolidated financial statements
for the year ended 31 December 2009
23Borrowings (continued)
a) Bank borrowings (continued)
2009
The weighted average interest rates paid were as follows:
Bank borrowings
8.99%
2008
5.08%
The US$ borrowings are aggregated with AED because the AED is pegged to the US$. At 31 December 2009, the Group had available AED 1,127
million (2008: AED 2,678 million) of undrawn committed borrowing facilities in respect of which all conditions precedent had been met.
b) Other borrowings
The carrying value and estimated fair value of the Group’s other borrowings (measured at amortised cost) are as follows:
2009
AED’000
2008
AED’000
2007
AED’000
525,300
600,975
414,307
45,252
387,246
608,863
-
1,642,955
608,863
-
1,585,834
996,109
2,251,818
Fair value (excluding advances from non-controlling interests, see below):
Loans from non-controlling interests
574,350
507,580
Vendor financing
Other
411,940
44,370
-
1,995,104
-
1,030,660
507,580
1,995,104
56,940
1,025,360
600,975
1,151,010
60,775
2,832,000
1,683,275
1,151,010
2,892,775
Carrying value:
Loans from non-controlling interests
Advances from non-controlling interests
Vendor financing
Other
Maturity – the borrowings are repayable as follows:
On demand or within one year
In the second year
In the third to fifth years inclusive
The fair value of advances from non-controlling interests is not equivalent to its carrying value due to the fact that it is non-interest bearing.
However, as there is no repayment date, a fair value cannot be reasonably determined.
The weighted average interest rates paid were as follows:
Other borrowings
2009
2008
2007
4.13%
3.90%
7.22%
(i) Loans from non-controlling interests
Loans from non-controlling interests includes the minority share of a shareholders’ loan advanced to Etisalat Misr amounting to AED 525.3
million (2008: AED 387.2 million). This loan carries interest at a fixed rate of 10% per annum. In 2007, the shareholders of Etisalat Misr resolved
to extend the loan repayment to 2011 and accordingly this is now classified as a non-current liability.
(ii) Advances from non-controlling interests
Advances from non-controlling interests of AED 601 million (2007 and 2008: AED 608.9 million) represents advances paid by the minority
shareholder of Etisalat International Pakistan LLC towards the Group’s acquisition of its 26% stake in PTCL, net of repayments. The amount is
interest free, does not have any fixed repayment terms, 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.
(iii) Vendor financing
Vendor financing includes AED 403.1 million in respect of Etisalat Misr relating to the acquisition of network equipment. The financing is due to
expire in 2011 and interest is payable at a fixed rate of 3.0%.
64
Notes to the consolidated financial statements
for the year ended 31 December 2009
23Borrowings (continued)
b) Other borrowings (continued)
(iv) Other
The balance of other borrowings is made up of non-interest bearing, corporate loans made to Etisalat DB Telecom Private Limited which are due
for repayment within one year.
2009
AED’000
2008
AED’000
2007
AED’000
1,079,387
3,421,704
722,305
2,644,420
343,000
5,387,343
4,501,091
3,366,725
5,730,343
Total borrowings
Amount due for settlement within 12 months
Amount due for settlement after 12 months
Analysis of total borrowings by currency
31 December 2009
Bank borrowings
Other borrowings
31 December 2008
Bank borrowings
Other borrowings
31 December 2007
Bank borrowings
Other borrowings
AED and
US$
AED’000
Egyptian
Pounds
AED’000
Euro
AED’000
Indian
Rupees
AED’000
Total
AED’000
1,632,291
1,015,282
615,686
525,300
667,280
-
45,252
2,915,257
1,585,834
2,647,573
1,140,986
667,280
45,252
4,501,091
1,236,641
608,863
468,000
387,246
665,975
-
-
2,370,616
996,109
1,845,504
855,246
665,975
-
3,366,725
2,826,525
608,863
343,000
1,587,960
309,000
54,995
-
3,478,525
2,251,818
3,435,388
1,930,960
363,995
-
5,730,343
65
Notes to the consolidated financial statements
for the year ended 31 December 2009
24.Payables related to investments and licences
31 December 2009
Investments
Etisalat International Pakistan LLC
Licences
Republic of Benin
Current
AED’000
Non-current
AED’000
Total
AED’000
2,882,060
-
2,882,060
20,901
42,318
63,219
2,902,961
42,318
2,945,279
1,899,776
83,767
887,746
-
2,787,522
83,767
18,922
57,196
76,118
2,002,465
944,942
2,947,407
949,712
41,890
1,717,096
-
2,666,808
41,890
21,732
87,530
109,262
1,013,334
1,804,626
2,817,960
31 December 2008
Investments
Etisalat International Pakistan LLC
Atlantique Telecom, S.A
Licences
Republic of Benin
31 December 2007
Investments
Etisalat International Pakistan LLC
Atlantique Telecom, S.A
Licences
Republic of Benin
According to the terms of the shareholders’ agreement between Etisalat International Pakistan LLC and the Government of Pakistan (“GOP”)
payments of AED 6,612 million (2007 and 2008: AED 6,612 million) have been made to GOP with the balance of AED 2,937 million (2007 and
2008: AED 2,937 million) to be paid in 6 equal semi-annual instalments of AED 489 million each. The amounts payable are withheld pending
completion of certain conditions in the shareholders’ agreement.
All amounts payable on acquisitions are financial liabilities measured at amortised cost and are mostly denominated in either US$ or AED and
thus do not result in significant exchange rate risk
25.Obligations under finance leases
Minimum
lease payments
Present value of minimum
lease payments
2009
AED’000
2008
AED’000
2009
AED’000
2008
AED’000
Amounts payable under finance leases
Within one year
In the second to fifth years inclusive
After five years
58,267
139,077
-
-
56,709
124,781
-
-
Less: future finance charges
197,344
(15,854)
-
181,490
-
-
Present value of lease obligations
181,490
-
181,490
-
56,709
124,781
-
181,490
-
Analysed as:
Amounts due within 12 months
Amounts due after 12 months
It is the Group’s policy to lease certain of its plant and machinery under finance leases. The average lease term is 2 years. For the year ended 31
December 2009, the average effective borrowing rate was 5.1%. The fair value of the Group’s lease obligations is approximately equal to their
carrying value.
66
Notes to the consolidated financial statements
for the year ended 31 December 2009
26.Provisions
Asset
retirement
obligations
AED’000
At 1 January 2008
Additional provision in the year
Utilisation of provision
Retirement
provision
AED’000
Other
AED’000
Total
AED’000
17,353
5,026
-
48,300
(47,069)
4,470
1,114
-
70,123
6,140
(47,069)
1,332
-
-
1,332
At 31 December 2008
Acquisition of a subsidiary
Additional provision in the year
Utilisation of provision
Unwinding of discount
23,711
9,469
6,711
-
1,231
494
-
5,584
286
67,895
(15,401)
-
30,526
9,755
75,100
(15,401)
-
At 31 December 2009
39,891
1,725
58,364
99,980
Unwinding of discount
60,086
39,894
Included in current liabilities
Included in non-current liabilities
99,980
Asset retirement obligations relate to certain assets held by Atlantique Telecom and Tigo Private Limited 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.
The retirement provision relates to an early retirement incentive package for the UAE national staff who have opted for early retirement.
27.Financial instruments
Capital management
The Group’s capital structure is as follows:
2009
AED’000
2008
AED’000
2007
AED’000
(2,915,257)
(1,585,834)
11,309,185
(2,370,616)
(996,109)
11,294,868
(3,478,525)
(2,251,818)
9,432,564
Net funds
Total equity
6,808,094
(40,389,298)
7,928,143
(35,619,762)
3,702,221
(28,330,722)
Capital
(33,581,204)
(27,691,619)
(24,628,501)
Bank borrowings
Other borrowings
Cash and cash equivalents
The capital structure of the Group consists of bank borrowings disclosed in note 23, cash and cash equivalents and total equity comprising share
capital, reserves and retained earnings as disclosed in notes 21, 29 and 30, respectively.
The Group monitors the balance between equity and debt financing and establishes internal limits on the maximum amount of debt relative
to earnings. The limits are assessed, and revised as deemed appropriate, based on 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 through the
optimisation of the net debt and equity balance.
67
Notes to the consolidated financial statements
for the year ended 31 December 2009
27.Financial instruments (continued)
Categories of financial instruments
The Groups’ financial assets and liabilities consist of the following at 31 December 2009:
Financial assets
Loans and receivables, held at amortised cost:
Advances to/due from associates and joint ventures (Note 17)
Finance lease receivables (Note 18)
Trade and other receivables, excluding prepayments (Note 20)
Available-for-sale financial assets (Note 16)
Held-to-maturity investments (Note 16)
Cash and cash equivalents (Note 21)
Financial liabilities
Other financial liabilities held at amortised cost:
Trade and other payables, excluding deferred revenue (Note 22)
Borrowings (Note 23)
Acquisition payments (Note 24)
Obligations under finance leases (Note 25)
Derivative financial instruments (see below)
2009
AED’000
2008
AED’000
2007
AED’000
1,243,448
36,268
7,344,627
505,667
47,245
5,197,165
210,470
57,709
3,740,203
8,624,343
401,657
91,850
11,309,185
5,750,077
381,898
220,440
11,294,868
4,008,382
490,329
220,440
9,432,564
20,427,035
17,647,283
14,151,715
20,519,613
4,501,091
2,945,279
181,490
333,134
18,702,544
3,366,725
2,947,407
293,805
15,932,645
5,730,343
2,817,960
22,493
-
28,480,607
25,310,481
24,503,441
Derivative financial instruments represent the fair value of the written put option over the equity of an overseas subsidiary.
Financial risk management objectives
The Group’s corporate finance function has overall responsibility for monitoring the domestic and international financial markets and 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 Executive Committee or the Board of Directors of either the Corporation or of the
individual subsidiary. The Group’s risk includes market risk, credit risk and liquidity risk.
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.
There has been no change to the Group’s exposure to market risks or the manner in which it manages and measures the risk during the year.
Foreign currency risk
The Group has limited transactional exposure to exchange rate risk as it generally enters into contracts in the functional currency of the entity.
These currencies include Indian Rupee, Egyptian Pounds and CFA Francs. The Group also enters into contracts in USD in the UAE and in Euros as
the currencies of these countries (AED and CFA Francs, respectively) are pegged to the USD and Euro and therefore result in limited exposure. At
31 December 2009, the Group did have financial assets and liabilities in Egypt that were in USD and other limited financial liabilities in Tanzania
that are in currencies other than its respective functional currency. In instances where the Group has a foreign currency transactional exposure,
such as Egypt, it considers whether to purchase derivative financial instruments to manage the exposure and reassess this conclusion based on
the level of exposure. The Group’s exposure to transactional exchange rate risk has not historically resulted in material impacts on profitability.
In addition to transactional foreign currency exposure, the Group is exposed to risk upon the translation of the Group’s foreign subsidiaries into
AED. The Group recognises the impact of the translation as a movement in equity.
68
Notes to the consolidated financial statements
for the year ended 31 December 2009
27.Financial instruments (continued)
Market risk (continued)
Foreign currency sensitivity
As discussed above, the Group’s only significant exposure to transactional foreign exchange risk is in Egypt. The following table presents the
Group’s sensitivity to a 10 per cent change in the Dirham against the Egyptian Pound. The impact has been determined by assuming the change
in the rate of 10% occurred at the beginning of the period and was held constant throughout the reporting period. A positive number indicates
an increase in profit and equity, if the AED /USD were to strengthen against the Egyptian Pound.
Egyptian pounds
2009
AED’000
2008
AED’000
Profit for the year
43,588
127,763
Equity
43,588
127,763
The Group’s sensitivity to foreign currency has not changed significantly during the year.
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, detailed at note 23. 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 period for which the interest rate is currently fixed.
Interest rate sensitivity
Based on the borrowings outstanding at 31 December 2009, 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 18 million (2008: AED 47 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 not changed significantly during the year.
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 16 for further details on the carrying value of these investments.
The Group’s sensitivity to other prices has not changed significantly during the year.
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 bank balance, the Group considers various factors in determining with which banks to invest its money including whether the bank is
owned by and/or has received government support, the rating of the bank by rating agencies and the level of security by way of governmental
deposit guarantees. In addition, the Group establishes a policy of not investing more than a set amount in any individual bank, which at
31 December 2009 was AED 1 billion (2008: AED 1 billion). 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.
At 31 December 2009, the Group’s bank balances were invested 83% (2008:77%) in the UAE and 17% (2008:23%) outside of the UAE. Of the
amounts in the UAE, an aggregate of AED 2.9 billion (2008: AED 2.5 billion) was with banks rated A+ by Fitch, AED 1 billion with banks rated
A by Fitch and AED 743 million (2008: AED 2.8 billion) rated A - by Standard and Poor’s.
In relation to its trade receivables, the 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 consolidated financial assets recorded in the financial statements, net of any allowances for losses, represents the
Group’s maximum exposure to credit risk without taking account of the value of any collateral obtained.
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 flows 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 2009 to further reduce liquidity risk is included in note 23.
The majority of the Group’s financial liabilities as detailed in the consolidated statement of financial position are due within one year. Further
information related to the borrowings due in more than one year is provided in note 23.
Fair value of financial instruments
Except for all financial liabilities classified as held at amortised cost and advances from non-controlling interests, the carrying amounts of
financial assets and financial liabilities recorded in the financial statements approximate their fair values.
69
Notes to the consolidated financial statements
for the year ended 31 December 2009
28.Provision for end of service benefits
The movement in the provision for end of service benefits is as follows:
AED’000
Balance as at 1 January 2008
Charge for the year
Payments during the year
533,808
282,944
(25,554)
Balance as at 31 December 2008
Charge for the year
Payments during the year
791,198
101,883
(10,747)
Balance as at 31 December 2009
882,334
The above provision was based on the following significant assumptions:
Discount rate
Average annual rate of salary increase
Average period of employment
2009
2008
2007
4.25%
7.27%
16 years
4.79%
5.18%
16 years
2.24%
6.01%
16 years
2009
2008
29.Share capital
Authorised:
8,000 million (2008: 8,000 million) ordinary shares of AED 1 each
8,000,000
8,000,000
Issued and fully paid:
7,187.4 million (2008: 5,989.5 million) ordinary shares of AED 1 each
7,187,400
5,989,500
Reconciliation of movement in share capital
At 1 January
Bonus issue of 1,197,900 (2008: 998,250,000) fully paid Shares
5,989,500
1,197,900
4,991,250
998,250
At 31 December
7,187,400
5,989,500
On 23 March 2009, the shareholders at the Extraordinary General Meeting approved the issue of one bonus share for every five shares held. The
Corporation has one class of ordinary shares which carry no guaranteed dividend rights.
The bonus shares distributed for the year 2008 do not qualify for dividends for that year.
30.Reserves
Development reserve
Asset replacement reserve
Statutory reserve
Translation reserve
General reserve
Investment revaluation reserve
70
2009
AED’000
2008
AED’000
2007
AED’000
6,950,000
7,098,000
6,714
272,782
12,167,505
141,678
6,000,000
6,124,000
3,408
267,023
10,362,099
130,972
5,000,000
5,124,000
3,408
388,829
8,360,349
345,559
26,636,679
22,887,502
19,222,145
Notes to the consolidated financial statements
for the year ended 31 December 2009
30.Reserves (continued)
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.
Statutory reserve
In accordance with the UAE Federal Law No.8 of 1984, as amended, and the respective Memoranda of Association of Etisalat International
Pakistan LLC and E-Marine PJSC, 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.
Translation reserve
Cumulative foreign exchange differences arising on the translation of overseas operations are taken to the translation reserve.
Investment revaluation reserve
The cumulative difference between the cost and carrying value of available-for-sale financial assets is recorded in the Investment revaluation reserve.
31.Acquisition of subsidiaries
(i) Sark Corporation N.V.
On 15 October 2009, the Group signed a definitive agreement to acquire a 100% equity interest in Sark Corporation N.V. (“Sark”) for a value
of USD 207 million (AED 761 million). The amount comprises USD 40 million (AED 147 million) as consideration to acquire equity interest and
remaining USD 167 million (AED 614 million) as a settlement against certain liabilities owed by Tigo and Sark. Sark is the holding company
of Tigo Private Limited, a mobile telecoms operator in Sri Lanka. The provisional fair value for the acquisition has been recorded based on the
historical book value.
Provisional
fair value
AED’000
Net assets acquired
Identifiable intangible assets
Property, plant and equipment
Inventory
Trade and other receivables
Cash and cash equivalents
Trade and other payables
Obligations under finance leases
Bank loans
Provisions
13,688
591,208
604
54,213
4,243
(567,902)
(1,774)
(136,518)
(14,366)
Net identifiable liabilities acquired
(56,604)
Share of net identifiable liabilities acquired (100%)
Goodwill
(56,604)
206,122
Total consideration (satisfied by cash)
149,518
Net cash inflow arising on acquisition:
Cash and cash equivalents acquired
4,243
The goodwill arising on the acquisition of Tigo is attributable to the expected profitability of the distribution of the Group’s products in the
new markets and the expected future operating synergies from the combination relating to the CGU of Tigo. Tigo contributed AED 69 million
of revenue and incurred a loss of AED 20 million for the period between the date of acquisition by the Group and the year end. The Group’s
revenue and profit would have been increased by AED 199 million and decreased by AED 34 million respectively if the Tigo was acquired on 1
January 2009.
(ii) Allianz Infratech Private Limited
On 17 March 2009, Etisalat DB Telecom Private Limited (formerly Swan Telecom Private Limited (“Swan Telecom”)) acquired 100% of Allianz
Infratech Private Limited, a company incorporated in India for a cash consideration of AED 79.9 million. The acquisition resulted in the
recognition of goodwill of AED 14.7 million and the assumption of the assets and liabilities of the acquiree.
71
Notes to the consolidated financial statements
for the year ended 31 December 2009
(iii) Etisalat DB Telecom Private Limited (formerly Swan Telecom Private Limited (“Swan Telecom”))
On 16 December 2008, the Corporation acquired a 44.7% controlling interest in Swan Telecom, an entity incorporated in India. There is no difference
between the provisional fair values and final fair values determined based on purchase price allocation exercise carried out by the Group.
Fair value
AED’000
Net assets acquired
Identifiable intangible assets
Property, plant and equipment
Assets under construction
Trade and other receivables
Cash and cash equivalents
Trade and other payables
Bank loans
Cash retained in the business
1,181,349
1,359
18,865
465,199
57,544
(2,050)
(1,051,252)
2,430,695
Net identifiable assets acquired
3,101,709
Share of net assets acquired
Goodwill
1,387,332
1,086,017
Total consideration
2,473,349
Satisfied by:
2,473,349
Equity contribution
Net cash inflow arising on acquisition:
Cash and cash equivalents acquired
57,544
Swan Telecom is a start-up with no customers or brands and thus no other intangible assets were identified on acquisition.
The goodwill arising on the acquisition of Swan Telecom is attributable to the expected profitability of the distribution of the Group’s products in
the new markets and the expected future operating synergies from the combination.
Swan Telecom did not contribute revenue to the Group for the period between the date of acquisition and the statement of financial position date.
(iv) Etisalat Misr
On 1 October 2008, Etisalat Misr acquired 99.99% of Egyptian Company for Internet and Digital Infrastructure (N.O.L.) S.A.E. and Egyptian
Company for Networks (Egy Net) S.A.E. and its subsidiaries Soficom SAE, all registered in the Arab Republic of Egypt and are internet service
providers. The acquisition resulted in the recognition of goodwill of AED 152 million. Etisalat Misr completed the purchase price allocation for
the acquisition during 2009 (Note 10).
(v) Iran licence On 13 January 2009, the Group won the third mobile network license for 2G and 3G in the Islamic Republic of Iran in a consortium with Tamin
Telecom. However, the Group has now been withdrawn from the proposed investment plan in the Islamic Republic of Iran.
32.Commitments
Capital commitments
The Group has approved future capital projects and investments commitments to the extent of AED 6,787 million (2008: AED 6,142 million) of
which AED 3,351 million (2008: AED 1,803 million) had been committed at 31 December 2009.
Lease commitments
The Group as lessee
Minimum lease payments under operating leases recognised as an expense in the year
72
2009
AED’000
2008
AED’000
94,777
20,715
Notes to the consolidated financial statements
for the year ended 31 December 2009
32.Commitments (continued)
Lease commitments (continued)
The Group as lessee (continued)
At the statement of financial position date, the Group had outstanding commitments for future minimum lease payments under noncancellable operating leases, which fall due as follows:
2009
AED’000
Within one year
In the second to fifth years inclusive
2008
AED’000
240,268
1,947,534
15,050
3,604
2,187,802
18,654
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 and rentals are fixed for an average of two years.
The Group as lessor
Property rental income earned during the year was AED 38.1 million (2008: AED 18.0 million). All of the properties held have committed tenants
for the next 2-5 years.
At the statement of financial position date, the Group had contracted with tenants for the following future minimum lease payments:
Within one year
In the second to fifth years inclusive
2009
AED’000
2008
AED’000
29,951
188
39,669
30,303
30,139
69,972
33.Contingent liabilities
At 31 December 2009, the Group’s bankers had issued performance bonds and guarantees for AED 774 million (2008: AED 93 million) in relation
to contracts. Guarantees relating to the Corporation’s overseas investments amounted to nil (2008: AED 271 million).
34.Events after the reporting period
In February 2010, the Group acquired additional shares representing 18% shareholding of Atlantique Telecom, thus increasing the total
shareholding from 82% to 100% for a consideration of USD 75 million (AED 276 million).
35.Dividends
AED’000
Amounts recognised as distributions to the equity holders:
31 December 2009
Final dividend for the year ended 31 December 2008 of AED 0.35 per share
Interim dividend for the year ended 31 December 2009 of AED 0.25 per share
2,096,325
1,796,850
3,893,175
31 December 2008
Final dividend for the year ended 31 December 2007 of AED 0.35 per share
Interim dividend for the year ended 31 December 2008 of AED 0.25 per share
1,746,937
1,497,375
3,244,312
A final dividend of AED 0.35 per share was declared by the Board of Directors on 23 February 2009 and approved by the Shareholders in the
Annual General Meeting held on 23 March 2009, bringing the total dividend to AED 0.60 per share for the year ended 31 December 2008.
An interim dividend of AED 0.25 per share was declared by the Board of Directors on 17 July 2009 for the year ended 31 December 2009.
A final dividend of AED 0.35 per share was declared by the Board of Directors on 23 February 2010, bringing the total dividend to AED 0.60 per
share for the year ended 31 December 2009.
73
Notes to the consolidated financial statements
for the year ended 31 December 2009
36.Earnings per share
2009
2008
Earnings (AED’000)
Earnings for the purposes of basic earnings per share being the profit attributable
to the equity holders of the Corporation
8,836,346
8,510,834
Number of shares (‘000)
Weighted average number of ordinary shares for the purposes of basic earnings per share
7,187,400
7,187,400
The Group does not have potentially dilutive shares and accordingly, diluted earnings per share equals to basic earnings per share. Earnings per
share for 2008 was adjusted for bonus shares issued in 2009 as approved by the shareholders at the Extraordinary General Meeting held on 23
March 2009.
37.First-time adoption of International Financial Reporting Standards
Basis of preparation of IFRS financial statements
For the purposes of these consolidated financial statements the date of transition to IFRS for the Group is 1 January 2008 (the “transition date”).
The Group has applied IFRS 1 First-time Adoption of International Financial Reporting Standards in preparing these financial statements. IFRS
1 sets out the procedures that must be followed when adopting IFRS for the first time as the basis for preparing the Group’s consolidated
financial statements. The Group is required to establish its IFRS accounting policies and, in general, apply these retrospectively to determine the
IFRS opening statement of financial position at the date of transition, 1 January 2008. In accordance with IFRS 1 (revised 2007) the Group has
prepared two comparative statements of financial position as well as related notes where applicable.
IFRS 1 exemptions
IFRS 1 provides a number of optional exemptions in the retrospective application of IFRS. The most significant of these are set out below,
together with a description, in each case, of the exemption adopted by the Group.
Business Combinations (IFRS 3, Business Combinations and IAS 28 Investments in Associates)
The Group has elected not to restate the accounting for business combinations completed before the date of transition (1 January 2008). As a
result, in the opening consolidated statement of financial position, goodwill arising from past business combinations remains as stated under
the Group’s previous accounting policies at 31 December 2007.
Cumulative translation differences (IAS 21, The Effects of Changes in Foreign Exchange Rates)
The Group has elected to deem all cumulative translation differences of all foreign operations to be nil at the date of transition.
The following is a detailed description of the main differences between the two sets of accounting principles as applied by the Group and the
impact on equity shareholders’ funds and net profit. There were no significant differences between IFRS and Group’s previous accounting
policies on the Group’s consolidated statement of cash flows for the year ended 31 December 2008.
Reconciliation of consolidated shareholders’ equity
Note
Total shareholder’s equity under previous accounting policies
Revenue recognition
Available-for-sale financial assets
Financial liabilities
Derivative financial instruments
Lease classification
Proposed dividend
Put options
Other adjustments
a
b
c
d
e
f
g
Total adjustments
Equity attributable to shareholders of the Corporation
Non-controlling interests
Consolidated equity under IFRS
74
1 January 2008
AED’000
31 December 2008
AED’000
24,056,986
29,044,508
(34,724)
345,559
242,862
5,838
1,746,937
97,950
(83,221)
130,972
129,409
(44,900)
(757)
2,096,325
(1,205)
160,842
2,404,422
2,387,465
26,461,408
31,431,973
1,869,314
4,187,789
28,330,722
35,619,762
Notes to the consolidated financial statements
for the year ended 31 December 2009
37.First-time adoption of International Financial Reporting Standards (continued)
Basis of preparation of IFRS financial statements (continued)
Reconciliation of the profit for the year
Note
Profit for the year under previous accounting policies
AED’000
8,166,416
Revenue recognition
Financial liabilities
Derivative financial instruments
Lease reclassification
Put options
Other adjustments
a
c
d
e
g
Total adjustments
(49,816)
(125,524)
(44,900)
(6,657)
(1,205)
61,881
(166,221)
Profit for the year under IFRS
8,000,195
The amounts in the preceding table were calculated after taxes and non-controlling interests.
Principal differences between the Group’s previous accounting policies and IFRS
The significant differences between the Group’s previous accounting policies and IFRS impacting the results and net assets of the Group are
described below. These differences affect the 2008 comparative information and, unless otherwise stated, have been applied retrospectively in
arriving at the transition statement of financial position under IFRS.
Measurement and recognition differences
a) Revenue recognition
IAS 18 Revenue states that revenue should be measured at the fair value of the consideration received or receivable. Based on the requirements
of IAS 18 the Group now spreads the value of discounts, customer incentives and other promotional offers relating to certain customer
contracts over the life of the contractual period or average customer relationship. Under the previous accounting policies the Group recognised
these discounts and incentives in the period that they were granted to the customer.
b) Available-for-sale financial assets
IAS 32 Financial Instruments: Disclosure and Presentation and IAS 39 Financial Instruments: Recognition and Measurement addresses the accounting
for, and reporting of, financial instruments. IAS 39 sets out detailed accounting requirements in relation to the financial assets and liabilities.
Upon adoption of IFRS, the Group has classified its investments in equity instruments as ‘available-for-sale’ financial assets as defined by IAS
39. These assets are measured at fair value at each reporting date with movements in fair value taken directly to equity. At 1 January 2008, a
cumulative increase of AED 346 million in the fair value over the carrying value of these investments was recognised.
Under previous accounting policies, the Group measured the carrying value of these investments at cost.
c) Financial liabilities
IAS 39 Financial Instruments: Recognition and Measurement requires financial liabilities to be classified as either fair value through profit and loss
or other financial liabilities.
The Group has two separate amounts payable on the acquisition of investments and licences which were previously held at cost but have now been
classified as other financial liabilities upon adoption of IFRS. In accordance with IAS 39 other financial liabilities are held at amortised cost.
d) Derivative financial instruments
IAS 39 Financial Instruments: Recognition and Measurement sets out detailed accounting requirements in relation to financial assets and financial
liabilities. During the year ended 31 December 2008 the Group took out a derivative financial instrument to hedge the foreign currency
exchange risk of the acquisition of an investment.
Under previous accounting policies, the loss made on the hedge was included within goodwill, however, given that the Group had not
designated a formal hedging relationship in respect of this transaction the loss has been taken to the consolidated income statement on
transition to IFRS.
e) Lease classification
IAS 17 Leases states that leases should be classified as finance leases if they transfer substantially all of the risks and rewards incidental to
ownership based on the substance of the transaction rather the legal form of the contract.
Upon adoption of IFRS the Group reclassified a building that it leases to one of its associates from an operating lease to a finance lease. The
recognition of this finance lease increased lease receivables by AED 58 million and reduced property, plant and equipment by AED 51 million at 1
January 2008.
75
Notes to the consolidated financial statements
for the year ended 31 December 2009
37.First-time adoption of International Financial Reporting Standards (continued)
Principal differences between the Group’s previous accounting policies and IFRS (continued)
Measurement and recognition differences (continued)
f) Proposed dividend
IAS 10 Events after the Statement of financial position date requires that dividends declared after the statement of financial position date
are not recognised as a liability in the financial statements, as there is no present obligation at the statement of financial position date.
Under the Group’s previous accounting policies, the Group recognised a liability for dividends that were proposed in respect of a prior
accounting period, even if the formal authorisation of the dividend did not take place until after the year end.
Accordingly, no accrual is required for the final dividend declared for 2007 of AED 1,747 million and for 2008 of AED 2,096 million.
g) Put options
The Group has issued written put options over the equity of certain of its subsidiaries. Under IAS 39 Financial Instruments: Recognition and
Measurement, the Group treats such options as financial liabilities at fair value through the profit and loss. Under its previous accounting
policies the Group did not recognise such options in its financial statements.
Presentation differences
Revenue
IAS 18 requires that revenue relates to the gross inflows of economic benefits received and receivable by the entity on its own account.
Accordingly, the Group now recognises revenues from certain customers on a gross basis which were previously recognised net of costs paid
or payable to those customers.
Taxation
IAS 1 Presentation of Financial Statements requires expenses in relation to taxation (comprising both income tax and deferred tax) to be disclosed
as a separate line in the consolidated statement of comprehensive income. IAS 12 Taxation defines taxable profit as the profit determined in
accordance with the rules established by taxation authorities upon which income taxes are payable.
Cash flow statement
Within the consolidated cash flow statement, dividend income has been presented under ‘investing activities’ whereas it was previously presented
within ‘operating activities’. No other significant changes have been made to the presentation of the consolidated cash flow statement.
Intangible assets
IAS 38 Intangible Assets requires the presentation of fixed assets that lack physical substance as intangible assets on the face of the consolidated
statement of financial position. Accordingly, software costs and IRUs that were previously included under property, plant and equipment are
now presented as intangible assets.
Deferred revenue
IAS 32 Financial Instruments: Presentation requires that financial assets and liabilities may only be offset only where a legally enforceable right to
offset exists. In the absence of such a right, deferred revenue balances related to deposit rentals collected in advance have been classified as
a current liability in the statement of financial position whereas previously the Group’s policy was to offset these against receivables.
76
Notice of Meeting
Notice is hereby given that the General Annual Shareholders’ Meeting will be held at 5.00 p.m., Tuesday 23rd March, 2010 at the Etisalat Head
Office Building, Abu Dhabi, and will be followed directly by an Extraordinary Meeting to be held on the same date and in the same place for the
purpose of transacting the following ordinary and special business;
GENERAL ANNUAL SHAREHOLDERS’ MEETING
1. To note the minutes of the Annual Shareholders Meeting held on Monday 23 March 2009.
2.To listen to the report of the Board of Directors on the Corporation’s activities and financial position and to consider and adopt the Corporations
audited consolidated financial statements for the year ended 31 December 2009 as well as the external auditor’s report.
3. To look into the Board of Directors recommendation on the distribution of dividends.
4. To absolve Members of the Board of Directors of liability in respect of the year ending 31 December 2009.
5. To absolve the external auditors of liability in respect of the year ending 31 December 2009.
6. To appoint the auditors for the current financial year.
Extraordinary General Assembly Meeting
To approve and declare the issue of bonus shares recommended by the Board of Directors and in this respect to pass the following Resolution:
“Resolved that pursuant to Section 40.2 of Chapter Eleven of the Corporation’s Articles of Association a sum of AED 718,740,000 (Seven hundred
eighteen million and seven hundred forty thousand Dirham) out of the General Reserve as on 31 December 2009 be capitalised and distributed by
issuing 718,740,000 fully paid shares of AED 1 each as bonus shares in the ratio of One share for every registered shares held ranking pari passu
with the existing shares of the Corporation.
It will be noted that bonus shares so distributed shall not qualify for dividends for the year 2009.
Further resolved that in the event of any member holding shares which are not an exact multiple of 10 the Board of Directors be and is hereby
authorised to sell on his behalf such fractional entitlement and distribute the sale proceeds thereof in proportion to their respective entitlement.
Further resolved that the Board of Directors be and is hereby authorised and empowered to give effect to this resolution and to do or cause to be
done all acts, deeds and things that may be required for the issue and distribution of 718,740,000 shares.“
Subject to approval by the General Assembly, Bonus Shares shall be allocated to the Shareholders registered on the Shareholders’ Register by the
close of day on Sunday 4th April 2010.
By Order of the Board
Corporation Secretary
Notes:
i.A shareholder entitled to attend and vote at the annual shareholders’ meeting is entitled to appoint a proxy to attend and vote on his/her
behalf. Such a proxy need not be a shareholder of the Corporation.
ii. Proxy forms may be obtained from Etisalat’s offices during official working hours
iii. Shareholders are requested to notify Abu Dhabi Securities Exchange (“ADX”) of any change in address.
77
78