Emirates Integrated Telecommunications Company PJSC (“EITC”) published its financial results for the second quarter of 2020. EITC reported for the first half of the year (H1 2020) revenues of AED 5.66 billion and a net income of AED 570 million.
The board of directors approved the distribution to shareholders of an interim dividend of AED 589 million, equivalent to an interim dividend per share of 0.13 AED.
Due to the general lockdown of activity in the UAE during Q2 2020, EITC’s financial performance was negatively impacted from the limitation of sales activity, the change in customer behaviour and the strong reduction of tourism and trade activities.
EITC reported in H1 2020 total revenues of AED 5.66 billion driven by a contraction in mobile revenues and other revenues, partially offset by the continued growth in fixed revenues.
Q2 2020 mobile revenues were under pressure due to the movement restrictions across the country, which led to an erosion of the base as a result of lower gross additions and lagged churn and a shift in customer behaviour from prepaid mobile usage to fixed usage as companies implemented work from home initiatives. Therefore, H1 mobile revenues declined to AED 2.81 billion, coming mainly from the significant reduction in the prepaid customer base and the prepaid usage.
H1 2020 fixed revenues continued to grow at a rate of 4.8% year-on-year to AED 1.29 billion, reflecting a healthy increase in the subscriber base fuelled by the higher home connectivity needs during the quarter.
To sustain the increase in data traffic across the country and the company’s deployment plans, EITC invested in Q2 2020 AED 509 million, equivalent to 19.1% of revenues. In addition to investments in capacity upgrades and network maintenance, Capex were also allocated to 5G network rollout and the implementation of digital transformation initiatives, in line with the company’s plans to drive long-term value creation.
H1 2020 EBITDA was down to AED 2.32 billion, impacted by the decline in mobile revenues, the increase in spending to optimise customer offering during the second quarter, and the inelasticity of certain costs to revenue decline. Consequently, net income declined in H1 2020 to AED 570 million.
During the quarter, EITC implemented a cost efficiency program that should allow, with the start of the market recovery in Q3, to contain the erosion in EBITDA and net income. The cost efficiency program includes initiatives related to optimisation of resources, a reduction in marketing spend and renegotiation of supplier contracts.
EITC’s mobile subscriber base was 6.42 million at the end of Q2 2020, down from last year, mainly due to the combination of lower sales due to movement restrictions and the churn lag.
Fixed customer base continued to increase at a healthy pace, reaching at the end of in Q2 2020 226 thousand subscribers, up by 6.8% from Q2 2019.