Etisalat AW proof 8

Transcription

Etisalat AW proof 8

Etisalat Cover lo
23/3/05
4:44 PM
Page 1
Annual Report 2004
leading the way to a brighter future
Emirates Telecommunications Corporation – Etisalat
Etisalat AW proof 8
23/3/05
1:48 PM
Page 1
Reports and Consolidated Financial Statements
for the year ended 31 December 2004
2
4
6
8
10
Tribute to
Sheikh Zayed Bin
Sultan Al Nahyan
Board of
Directors
Executive
Committee
Chairman’s
Statement
Overview of
Operational
Highlights
26
27
28
29
30
Auditors’
Report
Consolidated
Statement
of Income
Consolidated
Balance Sheet
Consolidated
Statement of
Cash Flows
Notes to the
Consolidated
Financial
Statements
Chief Executive
Officer’s
Review
Head Office:
Etisalat Building
Sheikh Rashid Bin Saeed Al Maktoum Street
P.O. Box 3838
Abu Dhabi
Telephone: +971 2 6283333 Fax: +971 2 6317000
Telex: 22135 ETCHO EM
www.etisalat.ae
Regional Offices:
Abu Dhabi, Dubai, Al Ain, West Coast, East Coast, Ras Al Khaimah
1
Etisalat AW proof 8
2
23/3/05
1:48 PM
Page 2
Etisalat AW proof 8
23/3/05
1:48 PM
Page 3
The leader who connected with his people
Sheikh Zayed Bin Sultan Al Nahyan
Etisalat’s chairman, board, management and staff join as one in paying tribute
to the late Sheikh Zayed Bin Sultan Al Nahyan whose death in November of 2004
closed a remarkable era in the development of the UAE. We owe a huge debt of
gratitude to Sheikh Zayed who took a personal interest in the Corporation’s
activities and was instrumental in its formation in August 1976.
Sheikh Zayed’s every action was driven by his desire to improve the lives of his
people and make sure they had all the facilities on hand to do so. This was evident
from his expressed wish that every corner of the country had state-of-the-art
telecommunications. The Etisalat board responded and a decision was taken to
extend Etisalat’s services to every city, town and village in the UAE.
Sheikh Zayed was deeply committed to the education of his people and the
development of their abilities and enterprises. Etisalat took its lead from Sheikh
Zayed to contribute to the development of a modern, knowledge-led society.
The Etisalat Academy and the College of Engineering are a direct response to
Sheikh Zayed’s vision of the UAE progressing to become a modern society with a
highly trained, well-educated and technology-smart workforce. It is a tribute to his
efforts to create employment opportunities for his people that Etisalat, in line with
corporations in other sectors, has put so much emphasis on recruiting and training
UAE nationals to help make that vision a reality.
This Corporation acknowledges Sheikh Zayed’s immense contribution to its
success. His leadership created the right environment for this business to thrive.
His drive and vision made it possible for Etisalat to aspire to and achieve the
high standards that have turned this Corporation into the telecommunications
leader in the region.
Sheikh Zayed’s influence remains a beacon of light that continues to guide
this country and inspire everyone at Etisalat to reach for a brighter future.
3
Etisalat AW proof 8
23/3/05
1:48 PM
Page 4
Board of Directors
Chairman
His Excellency Dr. Mohamed Khalfan bin Khirbash
4
Deputy Chairman
His Excellency Khalaf Bin Ahmed Al Otaiba
Members – from left to right
His Excellency Khalid Ali Al Bustani
His Excellency Hamad Mohammad Al Hur Al Suwaidi
Etisalat AW proof 8
23/3/05
1:48 PM
Page 5
His Excellency Shaikh Ahmed Mohammed Sultan Bin Suroor Al Dhaheri
Mr. Eisa Bin Nasser Al Serkal
His Excellency Abdul Rahman Al Rustomani
Mr. Saeed Rashid Al Yateem Al Muhairi
His Excellency Abdulla Ahmed Lootah
Mr. Saeed Mohamed Al Sharid (not pictured)
5
Etisalat AW proof 8
23/3/05
1:48 PM
Page 6
Executive Committee
Chairman
His Excellency Dr. Mohamed Khalfan bin Khirbash
Mr. Eisa Bin Nasser Al Serkal
His Excellency Abdul Rahman Al Rustomani
His Excellency Khalid Ali Al Bustani
His Excellency Shaikh Ahmed Mohammed Sultan Bin Suroor Al Dhaheri (Alternate)
Mr. Saeed Mohamed Al Sharid (not pictured)
Corporation Secretary
Mr. Humaid Abdulla Abdulrahman Al Nuaimi (not pictured)
6
Etisalat AW proof 8
23/3/05
1:48 PM
Page 7
7
Etisalat AW proof 8
23/3/05
1:48 PM
Page 8
Chairman’s Statement
Leading the way to a brighter future
A year of transition has seen Etisalat transformed from a national
institution into a global corporation that provides state-of-the-art services
to its domestic market, leads the region’s telecommunications sector and
competes on an international scale.
The Corporation has been part of the success
story that is the UAE and, I am proud to
note, a significant contributor to growth and
development in every sector of the economy.
Communications in the UAE and the
technology that drives it is second to none,
and this has impacted positively on businesses
and helped fuel record level of growth.
The UAE’s gross domestic product for
2004 was forecast to be in excess of AED 300
billion, which placed it among the top
three in the Arab world. Growth rates were
consistently among the highest in the region,
buoyed by a series of positive factors
including higher corporate earnings and
liquidity, heavy private investment and low
inflation on the back of results-oriented
liberal economic policies.
With the UAE impervious to dips
in the global economy Etisalat was able to
consolidate its position as a primary enabler
and facilitator for business while providing
services that added to the quality of life
of the nation.
The Corporation embarked on a bold new
strategy to achieve its ambitious objective of
building a platform for sustained growth in
an open market. The catalyst was the
legislative changes introduced on April 11,
2004 in line with a global drive to liberalise
the telecommunications sector. The wave
of liberalisation, within the World Trade
Organisation (WTO) framework is a welcome
development that offers major players such
as Etisalat unlimited opportunities.
8
The Corporation reacted positively to the
competitive environment that was introduced
and the management team appointed to
steer the new course was able to seize
the initiative. The strategy was clear, to
capitalise on the opportunities presented
by liberalisation and further strengthen
our position in the market.
The first phase launched mid 2004 had
three concurrent streams. The first was to
fine tune Etisalat’s package of services,
products and the quality of delivery by
putting the customer at the heart of the
business. This is instilling a new corporate
culture of continuing development within
the organisation and influencing the full
spectrum of service and product provision.
Second, there was a need to reshape the
organisation to reflect the new market reality.
This led to a renewed emphasis on teamwork,
a new management structure and streamlining
of the divisions to create a better fit. One
outcome was the merging of Comtrust
and EIM to create eCompany as a single
repository for all the Corporation’s online
businesses. This will lead directly to phase
two, the development of EDGE, the next stage
of the corporate group strategy to enhance
development and growth at Etisalat. This
initiative will be taken forward throughout
2005 and into the second half of 2006.
Third, a decision was taken to make the
transition to an international corporation
through strategic investment abroad and by
entering into new partnerships and alliances.
The Corporation invested close to AED 1.7
billion for a stake in Etihad Etisalat, Saudi
Arabia’s second GSM and 3G operator, and
further investment was made through its
Kanartel consortium to acquire the licence to
operate a second fixed line service in Sudan.
With its existing interests in Thuraya Satellite
Telecommunication, Zanzibar Telecom (Zantel),
Sudan Telecommunications Company (Sudatel),
and Qatar Telecom (Q-Tel), Etisalat established
itself as a first rank international player and
the regional communications leader.
Etisalat will continue to seek fresh
partnerships in markets that will build
value for stakeholders. Due to the changes
that have been made the Corporation can
approach these from a position of strength.
It has to be the first choice communication
partner in the region and beyond.
Financially, Etisalat saw its 2004 profits
increased by 19% to AED 3.4 billion and
earnings per share climb to AED 10.4.
At the same time revenues were up 13%
to AED 10.4 billion as domestic and
international traffic grew 16% and 28%
respectively. The board approved dividends
totalling AED 1,650 million, which was
paid in two equal instalments.
The Corporation boosted its balance
sheet by transferring AED 500 million to
the development reserve, AED 500 million
to the asset replacement reserve and
AED 750 million to the general reserve.
By sharpening its competitive edge,
Etisalat has increasingly become a valueadded brand for its customers. This has been
achieved by broadening its horizons beyond
its immediate boundaries and leveraging its
own financial strength and the economic
wealth of the UAE to lead the way to a
brighter future for customers, stakeholders,
employees and the nation.
French folds proof 4
23/3/05
3:39 PM
Page 1
The Corporation embarked
on a bold new strategy to
achieve its ambitious objective
of building a platform for
sustained growth in an
open market.
His Excellency
Dr. Mohamed Khalfan bin Khirbash
23/3/05
3:39 PM
Page 2
1,428
1,124
1,396
1,909
2,428
1,894
2,252
2,972
3,683
2,875
Overview of Operational Highlights
2000
2001
2002
2003
2004
2000
2001
2002
Mobile Subscribers
International Calls
(Year ended December 31, 2004)
(Thousand subscribers)
(Million minutes)
4.9%
2000
2001
2002
2003
2004
Internet Subscribers
2000
2001
2002
2003
2004
National Calls
(Million minutes)
2000
Dialup
Al Shamil
Business 1
2001
2002
2003
2004
209,386 256,074 290,350 317,038 362,930
1,322
7,511
15,836
24,503
44,900
41
900
2,649
5,328
10,641
2000
2001
2002
2003
Fixed Line Subscribers
(Thousand subscribers)
1,188
Others
10,004
5.8%
1,136
Internet
8,781
8.2%
1,094
Data Services
7,364
55.2%
1,053
Mobiles
5,916
25.9%
1,020
Telephones
2004
11,597
Breakdown of Net Revenue
2003
2004
Etisalat AW proof 8
23/3/05
1:48 PM
Page 9
Etisalat saw its 2004 profits increased by 19% to
AED 3.4 billion and earnings per share climb to AED 10.4.
Etisalat can be pleased with the contribution
of its value added services in 2004 and its
achievements such as being the first in
the region to roll out 3G technology. It is
justifiably proud of its cutting-edge mobile
services and the fact that by the year-end
eight out of nine people in the country were
using them. The Corporation’s capabilities
were repeatedly recognised, not least
through the participation of e-Marine in
the prestigious SEA-ME-WE-4 cable project
linking France and Singapore.
Fundamental to every one of these
achievements were the efforts and talent
of a committed Etisalat team of engineers,
product specialists, marketers and the
thousands of others who helped us realise
our vision to become the first choice
communications multi-service provider
. . . every second, every minute, 24 hours
a day, seven days a week.
Together we can lead the way to
a brighter future.
Chairman
1 March 2005
9
Etisalat AW proof 8
23/3/05
1:48 PM
Page 10
Chief Executive Officer’s Review
Open window
New beginnings
Choice and opportunity
Etisalat emerged from the defining events
of 2004 a stronger, more dynamic
Corporation with a clear commercial focus.
It continued to be both a beneficiary and
a driver of developments within the UAE’s
growing economy and results across the
group were ahead of expectations.
At the operational level the main success
story continued to be mobile services.
Connections surged 24% during 2004 to
establish a market penetration of 88% –
far ahead of any other country in the region.
Profits moved in line with business growth,
showing a 19% increase, while total
revenues increased 13%.
The performance confirmed the
Corporation’s position as one of the signature
businesses in this country and a symbol of
the enlightened economic strategy of the
nation’s leaders. This strategy has prioritised
economic diversification as the basis for
future growth, which in turn has led to a
more open and competitive marketplace.
The effect of the new law was to offer choice
to UAE customers. Choice meant opportunity
for the Corporation. It drew up a strategy to
ensure it was able to grasp the opportunity
to offer that choice.
Where customers wanted 3G, the
Corporation was able to provide that option.
If the demand was for one stop e-solutions,
that option too was available. Even if all they
wanted was to browse the full range of
personal use or business equipment this
option was not closed. Etisalat offered the
opportunity to do so through the newly
formed eCompany and by opening the door
to the full range of international equipment
retailers to enter the market with UAELABtested products.
Choice was extended to the interface
with government departments, where the
Etisalat Academy’s expertise and eCompany’s
services were asked to play a crucial role in
the planning and implementation of the
Federal eGovernment project. Etisalat signed
an agreement with the Ministry of Finance
and Industry to put in place the technical
framework that will form the basis for a
comprehensive system of eGovernment.
The Corporation has, throughout 2004,
acted as the Ministry’s technical partner in
creating the electronic network that links
all federal ministries and bodies and has
delivered a range of e-services. This is part
of the introduction of performance-based
budgeting throughout Federal Government,
a process being driven by the Ministry.
The Corporation, in an acknowledgement
of its central role in the life and development
of the nation, also became a partner with
the Ministry of Education and central to a
number of initiatives, including the Internet
for Schools project.
The new reality
This came to fruition for the UAE
telecommunications sector on April 11, 2004,
when Decree No.3 of 2003 in regard to the
Organisation of the Telecom Sector was
brought into force. This was the beginning
of a new era and the challenge facing the
Corporation was to adapt its operations
to a more commercially demanding and
competitive market.
10
Convergence, with its ability to link
customers’ phones, television and computers
in a single service through Etisalat’s cable
network holds out an enticing prospect for
customers and the Corporation - one that
became a reality in the course of the year.
A determined effort was made to
accelerate the new commercial outlook
and the influential GITEX exhibition during
October of 2004 was employed as a window
to present the Corporation’s reshaped profile
to the international telecommunications
industry. The Corporation’s giant stand and
displays were the centrepiece of the
exhibition and provided a launch pad for the
technology, products and services that will
define the future of telecommunications
in the region. These included television
streaming on mobiles, push-to-talk, video
calls, SMS from fixed line telephones
and even location-based services.
The single biggest event for the
Corporation during 2004 was winning the
licence to operate a second mobile service
in Saudi Arabia. It is a sign of how far Etisalat
has progressed, of its nimbleness and market
acumen that it was able to form a consortium
with some of the best businesses in the
Kingdom to compete against 11 of the most
substantial and influential global operators
in the sector – and win.
It was able to signal its financial strength
and reputation in the financial markets when
it managed the single biggest Initial Public
Offering in the region to meet the licence
requirement to offer 20% of the shares to
the public. Etisalat will play a leading role
in managing Etihad Etisalat.
The Corporation also led the Kanartel
consortium that won a licence to operate
a fixed line service in Sudan. While exploring
further investment opportunities in the
future, Etisalat will ensure it follows its
mission statement and bring value to host
nations, its partners, stakeholders, customers
and employees.
The introduction of competitive choice in
the UAE market and the telecommunications
sector as a whole is good news for customers
and operators. The move has led to genuine
opportunities for growth and expansion for
the Corporation and confirmed its position
as the first choice operator and service
provider in the region and beyond.
Etisalat AW proof 8
23/3/05
1:49 PM
Page 11
Etisalat will
continue to invest
in foreign markets to
leverage its investments
in infrastructure and
technology.
As the largest
quoted company in the
country the Corporation
recognises that it has a duty to
provide leadership across the board
by setting the highest standards
in each of its area of operations,
from employment practices to
corporate governance, ethical
standards to community
engagement.
The creation of
eCompany as a one-stop
shop offering information and
communications technology
solutions for corporate and
retail customers was one of
the landmark developments
of the year.
For the wireless user, 3G mobile services will open up lifestyle
choices. Available under the Mubashir brand name, the
Corporation’s 3G service offers the full range of premium
facilities. These include live video calls on 3G-enabled mobile
handsets, high-speed Internet access, video conferencing on
mobiles, streamed television content and a great deal more.
11
Etisalat AW proof 8
23/3/05
1:49 PM
Page 12
Chief Executive Officer’s Review continued
Financial Review
Capitalising on UAE’s vibrant economy,
Etisalat continues to be one of the most
financially secure and effectively managed
corporations in the region. This is reflected
in the impressive financial results achieved in
2004. Overall, consolidated revenues for the
year grew to AED 10.4 billion, a 13% increase
on the previous year’s AED 9.2 billion. The
main catalyst for this growth was Mobiles.
Revenues from this segment grew by 18%
over the previous year and now represent
55% of total revenues. These gains were the
result of the growth in subscriber numbers
and a strong take-up of GPRS, EWAP and
roaming. Both domestic and international
traffic showed appreciable increases over
2003, by 16% and 28% respectively.
Consolidated profits for the year climbed
19% to AED 3.42 billion from AED 2.87 billion
in 2003 and represent a 26% return on capital.
Earnings per share rose to AED 10.4 from
AED 8.7 in 2003.
The Corporation maintained its low ratio
of two staff per 1,000 lines.
12
Approximately AED 100 million was invested in
the UMTS/3G mobile network in 2004.
Capital expenditure and
infrastructure development
Investment in Etisalat’s backbone network,
expansion and new technologies are keys to
a successful future for Etisalat. In 2004 capital
expenditures increased to AED 1.36 billion
from AED 1 billion in 2003. This increase
reflected the focus on growth in the mobile
network, both for expansion and the new
Universal Mobile Telecommunications
System (UMTS)/3G network.
Approximately AED 100 million was
invested in the UMTS/3G mobile network
in 2004.
Other highlights included operating
trials for the Next Generation Network
(NGN) infrastructure for the fixed line
network covering Dubai, Abu Dhabi and
Sharjah; expansion of the ethernet-tothe-home initiative; video conferencing;
terrestrial trunking radio access (Tetra);
fibre optic transmission lines and hybrid
fibre-coax cables for the broadband access
and broadband wireless networks.
23/3/05
3:39 PM
Page 3
"We have to communicate regularly
with a great many locations, people and
business divisions, so we really appreciate
Etisalat’s voice services. They are 100 per cent
reliable and ensure that we are available at
all times. This is crucial to our business and
is one of the key factors that helps us
stay on the top.
“We have found Etisalat's
Asynchronous Transfer Mode (ATM) data
service indispensable. It seamlessly connects
our 34 buildings in Dubai while maintaining
security and quality of data. We have used it
for four years and we have come to rely on
its capabilities and quality for our systems
networking requirements. We know
we are in good hands.”
His Highness Sheikh Ahmed bin Saeed Al-Maktoum,
Chairman, Emirates Group
Emirates Group operates Dubai’s
award-winning airline. The group is serviced
by a dedicated Etisalat team headed by an
account manager. Etisalat provides voice and
data connectivity across the group. Its service
varies from fixed-line phones to complete
Internet connectivity.
23/3/05
3:39 PM
Page 4
“Our customers can rest easy
knowing the lines to the bank are
always open and we are just a call or
a click away. We depend on Etisalat’s
voice services to connect with our
58 branches and thousands
of customers.
“The technical assistance and
customer support we receive from
the Corporation is superb. We are
confident that if we need something
actioned, whatever the time,
it will be done.”
Michael H Tomalin,
Chief Executive, National Bank of Abu Dhabi
National Bank of Abu Dhabi (NBAD), one
of the Corporation’s priority customers, subscribes
to almost the entire spectrum of Etisalat services.
These include Asynchronous Transfer Mode (ATM) and
Frame Relay data services, the new Corporate GPRS,
voice services including telephones - fixed, mobile
and leased lines - and Internet connectivity
across all branches.
Etisalat AW proof 8
23/3/05
1:49 PM
Page 13
Future Development
Etisalat’s customers response to the
tremendous range of services that will
emerge from the rollout of the Triple Play
convergence of voice, data and multimedia
will have a large say in the Corporation’s
programme of future developments.
To deliver on the potential for these
new services a major schedule of work was
launched to upgrade all core network
facilities to bring the promised services
and applications closer to reality. This paved
the way for the Next Generation network
(NGN) to be rolled out in 2005.
These new backbone networks – which
rely on packet switched, Internet protocol (IP)
technology – can transmit vast quantities of
voice, Internet, video or any other data-based
service. They do so efficiently and over one
seamless network.
The NGN is the platform on which the
service possibilities of technologies such as
ethernet-to-the-home (ETTH) – broadband
access over wire – and 3G’s broadband access
over the wireless network will be realised.
One possibility it opens up is that content
providers will be able to offer their services
to customers at home over the wire line or
on the move over the mobile network from
a single service delivery platform.
For the wire line user, this will mean
access to more than 200 channels of television
and radio, video on demand, WebCam
surveillance, interactive gaming, video
conferencing and much more. The services
will all be available over a single wire
connected to the television set, a computer
or an enhanced featured telephone.
For the wireless user, 3G mobile services
will open up lifestyle choices. The technology
has already opened the door to multimedia
messaging, routine video conferencing and
specialised applications such as remote
diagnostic for field service engineers and
video reporting for security staff. There are
numerous entertainment possibilities as well,
including video clip, mobile TV, interactive
gaming and MP3 for downloading music files.
People on the move will be able to use
their mobile to find out about flight times,
change their travel plans, get the latest news,
check stock prices, book hotels and
restaurants and much more.
Location aware services will allow customers
to use the network to find facilities in areas
as they pass through, such as the nearest
ATM or pharmacy, or be made aware of the
road works in the vicinity. The possibilities
are numerous.
A limited number of the above services
have been available to Etisalat customers but
the new IP Multimedia System (IMS) that is
being developed will open up new possibilities.
It will introduce the true multimedia aspect
of triple play by facilitating multiprogramming
over a single device at the same time.
IMS will be the framework that delivers
vast and flexible service creation. Its
adaptability will allow services and applications
to be changed as fashions, tastes and habits
move on. Significantly, it will allow interface
with existing networks.
The future development of the
Corporation’s mobile network will also see
the deployment of High Speed Downlink
Packet Access (HSDPA), a new and advanced
technology. This network enhancement,
scheduled for testing in late 2005 and
introduction in 2006, will provide 3G
customers with data services at more than
four times the speed available on the
current network.
It will also pave the way for the next
leap in wireless technology: 3.5G.
Business Segments
Network Services and UAELAB
The basics of reliability, consistency and
availability continued to be the main feature
of Etisalat’s core fixed line network. Those
qualities combined to play an important role
in encouraging the influx of global and regional
businesses making the UAE the base for their
Middle East operations and in many cases
the location for their headquarter offices.
The Corporation in turn reaped the
benefits of their presence. Domestic and
international traffic flow in 2004 increased
by 16% and 28% respectively and Etisalat’s
sound network has been the basis for the
development of a communications culture
in the UAE and led to the phenomenal
growth in mobile use.
For corporate customers last year’s launch
of the service 800-My Name toll-free facility
was a welcome addition to the Corporation’s
range of service offerings. 800-My Name
allows companies to have their name or brand
as a part of their contact number. Callers
punch in numbers corresponding to the
letters in the name. This service achieved a
35% net increase in the first four months
of its introduction and the 2004 target was
beaten by a comfortable 15%.
The creation of the Home Country Direct
Service, the result of the Corporation’s tie-in
with 56 operators from 46 countries, was also
well received. There was a big take-up of the
facility, which allows callers to dial the UAE
directly from abroad. Users of the service can
call any number in the UAE using an Etisalat
calling or prepaid card and can reverse charge
operator-assisted calls to any telephone
subscriber in the UAE.
In addition to these launches two
complementary initiatives were given the
go-ahead that signalled a significant shift
in Etisalat’s strategy for fixed-line telephony
in the UAE.
In a bid to boost sales and purchase of
equipment the Corporation vacated its
dominant position at the retail end of the
market in order to encourage new vendors
to step in and broaden the range of products
available to customers. This farsighted move
should lead to significantly increased activity
in the retail market for telecom equipment
and stimulate equipment use and traffic.
The type of equipment involved included
the likes of telephone sets, fax machines,
telex, answering machines, PABX and
keyphone systems. Significantly, just prior to
Etisalat exiting the hardware reseller market,
the sales target for PABX systems and
keyphone systems were crossed. In order
to kickstart this retail initiative towards the
end of the year the Corporation announced
it would waive all future rental charges on
the equipment it rented out that was kept
at customers’ premises. Effectively, the
waiver of rental freed up customers cash
for new purchases.
13
Etisalat AW proof 8
23/3/05
1:49 PM
Page 14
At the same time the Corporation opened
up the doors of its Business Centres across
the country to vendors who have been
encouraged to rent space to sell and promote
all type-approved products. The Centres
became one-stop shops for customers
looking for services and products.
To further boost retail activity Etisalat
recast its UAELAB operation as the guarantor
of the quality of the telecom hardware on
retailers’ shelves. The early signs were
encouraging and the UAELAB’s seal of approval
is becoming established as a quality mark.
The lab has seen big changes and major
online improvements, new permit
introductions, and promotional packages
transformed its capabilities in 2004. The
UAELAB is regarded as a driver of quality
and standards and is expected to become
the standard bearer and set benchmarks
for the region.
Data Services
The Division’s two flagship services Asynchronous Transfer Mode (ATM) and
Frame Relay – proved a huge hit with
corporate customers, whose numbers increased
by 35% and 20% respectively during 2004.
ATM, which transports data from a wide
range of applications using one seamless
network, supports a variety of traffic,
including data, image, voice and video and
enables corporate users to consolidate
information from different networks. This
continued to see progressive take-up and
there were 683 customers by the year end.
Frame Relay, at the cost effective end of
the Division’s service provision, also proved
popular with subscriber numbers up to
1132. The service transports data in packet
mode and offers speed, transparency and
enhanced connectivity.
14
e4me
Etisalat’s online service centre e4me took
a major step forward in the global battle
against credit card fraud when it introduced
a new and more secure payment technology
for such transactions.
The initiative is expected to benefit
both retailers and consumers and will add an
extra layer of security to the UAE’s booming
retail sector.
The division also saw tremendous demand
from customers for its online bill payment
services. Its commitment to making a variety
of transactions more accessible led to a
variety of new services. These included the
introduction of a facility to allow e4me
accounts to be accessed from outside the
UAE and payments made from any part of
the world. It also opened up international
access to the e4me portal, made it possible
to apply for the Al Shamil high speed Internet
service online, allowed resetting of Internet
access password and introduced auto
registration for eCompany Internet users.
By the end of 2004, e4me had 124,350
registered users who had completed more
than 717,130 transactions during the 12month period. Its sales soared, with demand
particularly high for Wasel pre-paid mobile
cards. Total annual sales of Wasel cards passed
the 1 million mark and were boosted by
GITEX and purchases through e4me.
Mobile Services
Mobile use continued to show strong growth
in the UAE in 2004 when penetration
increased to 88% as demand from customers
showed no signs of abating.
The number of subscribers increased by
24% in the year while revenues improved
18%, reflecting the increase in activity as
mobile use became more widespread and
diverse. The mobile phone is now both a
business tool and a basic personal accessory
that is increasingly used for far more than
making calls and text messaging.
There is clear evidence that growth last
year was increasingly driven by 2G value-added
services, such as GPRS and EWAP, and their
offering of multi media messaging, Internet
access and audio streaming, in particular.
Customers certainly responded positively to
these and the number of takers for GPRS and
EWAP increased by 58% and 51% respectively.
The number of EWAP phone users is especially
significant with almost 800,000 such phones in
use, representing one in four of the UAE total.
The most popular value added service with
GSM is SMS. SMS and MMS accounted for
over 80% of the 27% increase in data
revenues. Content is forecast to be the next
big development.
Etisalat’s roll out of 3G mobile services the first provider to do so in the MENA region
- has increased the focus on content. Because
the data capacity for 3G is higher, providers
can push richer content and 3G has certainly
paved the way for communications and service
provisions to shift up a level in the UAE.
Available under the Mubashir brand name,
the Corporation’s 3G service offers the full
range of premium facilities. These include
live video calls on 3G-enabled mobile
handsets, high-speed Internet access, video
conferencing on mobiles, streamed television
content and a great deal more.
MMS is available to Wasel (pre-paid) and
GSM customers alike as a standalone service
through MMS-enabled handsets.
The offer of the basic mobile package to
customers was enhanced during the year by
bolt-on services, such as Kallemni free call
back. This allows Wasel customers to request
return calls within the country.
The launch of the Mnet GPRS roaming
facility further increased the capabilities open
to mobile users. The technology provides
access to Internet and data for users on the
move and faster than normal mobile data
access. Etisalat, in partnership with Sakhr
Software, also launched the Tarjim service,
which offers mobile users translations from
Arabic text to English and vice versa using
SMS messages.
For corporate customers, Etisalat’s Bulk
SMS Push Service offers organisations costeffective marketing communication one-toone with target audiences. The service is
increasingly deployed to raise the profile of
products and services.
The SMS Broadcast service was particularly
welcome for students taking exams last year
and their family and friends. The service
allows UAE schools, colleges and other
educational institutions to communicate
instantly with selected audiences through
mobile SMS messages.
Etisalat AW proof 8
23/3/05
1:49 PM
Page 15
Asynchronous
Transfer Mode
(ATM) and Frame
Relay – proved a huge
hit with corporate
customers.
24%+
The number of subscribers
increased by 24% in the
year while revenues
improved 18%.
Etisalat’s online
service centre e4me took a
major step forward in the
global battle against credit
card fraud when it introduced
a new and more secure
payment technology for
such transactions.
Growth last year was increasingly driven by 2G value-added
services, such as GPRS and EWAP, and their offering of multi media
messaging, Internet access and audio streaming, in particular.
15
Etisalat AW proof 8
23/3/05
1:49 PM
Page 16
eCompany
The creation of eCompany as a one-stop shop
offering information and communications
technology solutions for corporate and retail
customers was one of the landmark
developments of the year.
Etisalat’s flagship Internet businesses
operation, created from the merger of Comtrust
and Emirates Internet and Multimedia in June
2004 was the launchpad for the Corporation to
offer end-to-end customer-focused e-services
throughout the region.
The eCompany mission is to strengthen
relationships with customers and partners
and provide them with high-value solutions
through a single point of contact. It has the
facilities to provide a complete portfolio
of Internet offerings, value-added services,
Information Communication Technology
(ICT) consulting and project management.
Most of its services are based in Etisalat’s
Data Centres.
The new structure that emerged with
the creation of eCompany has increased the
potential for Etisalat to realise its regional ICT
ambitions and forge channel partnerships with
Internet development companies across the
region. These alliances enhance the technology
solutions and service portfolio, extend
eCompany’s reach and will help boost its
impressive list of clients from outside the UAE.
16
Nevertheless, the domestic market remains of
primary importance and two of eCompany’s
key projects have been the Federal
eGovernment initiative and the rollout of
broadband Internet access solutions for all
UAE public and private schools in conjunction
with the UAE Ministry of Education.
The eCompany’s Al Shamil home users
and Business One broadband services
showed their vast potential in 2004, with
customer numbers growing by 83% and
100% respectively. These sizeable increases
were driven by the introduction of new
packages and promotions.
There was robust growth of more than
60% in eCompany’s online payment business,
confirming its position as the leading provider
of online payment services in the UAE. With
1.7 million Internet users in the country at
the end of 2004 the UAE has a penetration
rate of 41%, which compares favourably
with rates globally.
The flurry of activity that followed the
creation of eCompany led to the launch
of a number of new services, including
narrowband streaming, a new Internet mail
web interface, a new control panel and
website builder for the shared Web-hosting
service and an increase in data storage and
data traffic allowances for customers.
The list of new services also included free
anti-spam and anti-virus for the eCompany
Internet Mail (EIM mail), new shared web
hosting packages MySite and MyWeb, a
consumer competition to promote its online
learning service and payment verification
systems for consumers.
Soon after its formation, eCompany joined
the new Gulf and Middle East ISP Association
(GMISPA), which includes ISPs from Saudi
Arabia, Kuwait, Bahrain, Lebanon and Jordan.
The progress made through eCompany
was recognised internationally when the
International Telecommunications Union
(ITU) selected Dubai as the venue for its
regional ITU conference on eGovernment
and Internet Protocol.
Ebtikar
Ebtikar, the Corporation’s card manufacturer
broke new ground in 2004 by developing and
manufacturing 3G SIM cards, the latest
technology in this part of the sector.
The new card added to Ebtikar’s extensive
range of pre-paid scratch, smart, memory
chip and GSM SIM cards for local, regional
and international clients and confirmed the
manufacturer’s exceptional ability to generate
and exploit commercial opportunities for
its products.
In response to the escalating demand
from customers, production at Ebtikar’s new
facility in Ajman hit new highs and more than
200 million cards were manufactured during
the year. The division plans to increase
capacity to 350 million in 2005 - 310 million
pre-paid cards, 10 million SIM cards and 30
million smart cards.
Ebtikar showcased its products
and services at the main regional and
international shows and exhibitions such as
GITEX 2004, GSM South Africa Exhibition,
CardEx in Egypt, and Cards in Paris, France.
23/3/05
3:39 PM
Page 5
“One of the reasons we tied
up with eCompany was because of its
established reputation as a regional provider
of outstanding services to both public and
private sector organizations. It has the credibility
to deliver and the potential to become our most
strategically significant partner. We saw the
potential for many synergies with eCompany
in terms of joint value proposition based
on our solutions, especially in the
eGovernment space.
“Even though the alliance is very recent, we
have already embarked on various initiatives. We
have an active partnership with eCompany on the
implementation of an e-mail and collaboration
platform for the Federal eGovernment. We have
also signed an education agreement through
eCompany with the Ministry of Education.
There are several other initiatives
in the pipeline.”
Emre Berkin,
Chairman, Middle East and Africa, Microsoft
Microsoft and eCompany are rolling
out integrated market specific
solutions throughout the region.
23/3/05
3:39 PM
Page 6
“We are delighted with our strategic
business partnership with Etisalat. The Launch
of ePayment services will enable our merchants
to accept and process American Express
transactions online. This is illustrative of our
commitment to providing world-class services
to both our Cardmembers and merchants.”
Trevor Stokes, President and CEO Middle East
and North Africa, American Express
American Express has increased its
Cardmembers base by 200 per cent last year
as result of adopting new strategies and
continuously upgrading its services.
Etisalat AW proof 8
23/3/05
1:49 PM
Page 17
EMIX
Emirates Data Clearing House (EDCH)
Contact Centre
Emirates Internet Exchange (EMIX) continued
to expand international online access to
support the growing demand from its
customers. By the year-end the Net Exchange
pioneer had increased available capacity to
2.325 gigabytes of Internet bandwidth on
international submarine cables such as SEAME-WE-3 and FLAG. EMIX also has its own
extensive network of Private Peering Partners.
These partnerships greatly enhance operating
efficiency through direct routing of traffic
to popular domain name servers.
With local and regional demand for
broadband access growing at ever increasing
rates, the available capacity on existing
submarine cables will soon be exhausted.
In early 2004 a consortium of investors,
which included Etisalat, signed an agreement
to construct SEA-ME-WE-4, a 1.28 Terra bps
cable extending from Singapore to France.
This cable, configured to an initial capacity of
160 gigabytes is expected to be operational in
late 2005. Etisalat’s share is 10 gigabytes,
which will provide EMIX with sufficient
international bandwidth to satisfy demand
from existing and future customers for many
years to come.
EMIX was the first Network Access Point
in the region and continues to extend its
reach by promoting its capacity, efficiency,
network security and cost effectiveness.
With Etisalat’s emergence as a major
international telecom operator combined
with the availability of SEA-ME-WE-4, EMIX
continues to enhance its position as the
leading transit hub in the MENA region.
The Emirates Data Clearing House, the only
one of its kind in the Middle East – there are
just six worldwide - saw a 72% increase in
call records processed last year.
Translated into value terms this came out
at AED 2.12 billion – an increase of 51% on
2003, representing an extremely good year
for the division.
The data clearing house provides a range
of secure solutions for GSM operators around
the world in data and financial clearing,
roaming agreement negotiations, fraud
detection and control, management reporting,
online service, signalling transfer point, GRX,
VSAT services and others.
The number of clients for these increased
to 39 as four new telecom operators - Wataniya
Telecom Algeria, Vodacom Mozambique, MTC
Lebanon and Etihad Etisalat, Saudi Arabia –
came on board during 2004.
It is clear that EDCH, which provides a
single point of support for the roaming
facility offered by the Corporation, is proving
a very attractive proposition for telecom
operators the world over.
The data clearing house is now established
among the first rank of global GSM operators
and is renowned as a reliable and cost
effective answer to customers’ roaming
support needs across the region and beyond.
EDCH held its sixth Annual User Group
Meeting in Dubai on December 7 and 8, 2004,
celebrating 10 years of operations. Discussion
centred on the roll-out of services such as
the market-roamers management system a pre-paid roaming solution - and a customer
support ticketing system, which are expected
to dominate future developments.
Activity surged in 2004 at Etisalat’s Contact
Centre as the volume of calls and customer
numbers both showed significant growth. The
total number of calls taken increased to 61
million during the 12-month period, against
56 million in 2003.
Customer support was a significant part
of the Centre’s activities and accounted
for more than 1 million of the calls made.
The Centre’s portfolio of premium services including debt recovery, telesales and market
research - also proved an attractive proposition
for customers and approximately 50 projects
were commissioned.
Dubai’s eGovernment services joined
the Centre’s growing list of corporate
customers, which includes eight government
departments. In partnership with Etisalat
Academy, the Centre bid for and won a
contract to provide consulting services to
Abu Dhabi Water and Electricity Authority.
There was a positive response from
customers to the Centre’s decision to set
up its own SMS management system and
move into the specialised area of sending
bulk messages and receiving premium rate
messages. The benefits were certainly clear
to those customers who signed up to multiyear agreements.
The 12-month period saw the use of
the Yellow Pages Plus service multiply a
remarkable 17.7 times. The Contact Centre
branded service, which provides information
for residents and tourists on topics that range
from business to entertainment, is believed
to have benefited from the influx of visitors
to the country.
17
Etisalat AW proof 8
23/3/05
1:49 PM
Page 18
Activity surged in
2004 at Etisalat’s Contact
Centre as the volume of calls and
customer numbers both showed
significant growth. The total
number of calls taken increased
to 61 million during the
12-month period, against
56 million in 2003.
Ebtikar, the Corporation’s
card manufacturer broke new
ground in 2004 by developing
and manufacturing 3G SIM
cards, the latest technology
in this part of the sector.
72%+
The Emirates Data Clearing
House, the only one of its kind
in the Middle East – there are
just six worldwide - saw a 72%
increase in call records
processed last year.
The Corporation joined the ranks of the global telecom
industry’s superpowers with 2004’s successful US$3.457 billion
bid through a consortium with local partners to operate a
mobile service in Saudi Arabia. The acquisition of the operator’s
licence by Etihad Etisalat dramatically altered the regional
telecommunications landscape.
18
Etisalat AW proof 8
23/3/05
1:49 PM
Page 19
Investments
Etihad Etisalat
The Corporation joined the ranks of the global
telecom industry’s superpowers with 2004’s
successful US$ 3.457 billion bid through a
consortium with local partners to operate a
mobile service in Saudi Arabia. The acquisition
of the operator’s licence by Etihad Etisalat
dramatically altered the regional
telecommunications landscape.
Etihad Etisalat, which was incorporated on
December 14 of 2004, was awarded a 25-year
option to own and operate GSM, or 2.5G, and
3G services in the Kingdom. The Saudi cabinet
confirmed the decision, which followed
acknowledgement that Etihad Etisalat’s sealed
bid was the highest submitted of the six
made by the consortiums shortlisted from
the original 11 competitors.
The bidding process was followed
by a US$ 2.35 billion Murabaha funding
arrangement to part finance the deal. The
transaction, a model of its type and the
single largest Islamic funding to date, was
awarded the title of Islamic Finance Deal
of the Year by prestigious international
magazine “Euromoney”.
The Murabaha was succeeded by a
record-breaking initial public offering in the
Kingdom, which was 51 times oversubscribed
by nearly 25% of Saudi Arabia’s population.
Trading in the shares began in late December
and within a week the prices rocketed by
more than 640%, taking the market value
capitalization to nearly US$ 10 billion. Etisalat
continues to own a 35% stake in the company.
As the operator for Etihad Etisalat it is required
to maintain a minimum 15% stake for the
duration of the management agreement.
At the year-end, the Corporation’s share of a
guarantee provided to a syndicate of banks
for the Islamic financing facility was AED 2.6
billion. The market value of the investment
was AED 12.9 billion.
The size of the investment and its
sophisticated, staggered structure reflected
not only the potential of the Saudi market
but also the scale of the Corporation’s current
operations and its position as the leader in
the regional telecommunications sector.
This single landmark deal forced investors
and competitors alike to reassess the
ambitions, capabilities and sheer financial
muscle of the Corporation.
Kanartel
The Saudi investment was followed by the award
in November of 2004 of the licence to operate
a second fixed line service in Sudan through a
40% stake in the Kanartel consortium.
Sudan’s regulatory authority awarded
the Corporation-led Kanartel the licence
ahead of the two rival consortiums left in
the bidding after the first round. Immediately
prior to the year-end Kanartel announced
it would begin work to develop the
infrastructure for the country’s second
nationwide fixed line phone service.
Etisalat will manage, operate and
maintain the Kanartel network while the
Dubai-based Etisalat Academy will train
and help develop Sudanese manpower.
Kanartel will provide services based on the
latest wireless, wired, satellite and radio
technologies and expects to have 500,000
fixed lines operational in its first year.
While the importance of the domestic market
remains paramount, it is clear that Etisalat
has become a truly international player.
Besides its holdings in Etihad Etisalat and
Kanartel its portfolio includes substantial
investments in Thuraya, the global satellitebased telecom service provider, and minor
investments in Sudatel, Zantel and Q-Tel,
which give it unrivalled reach and positioning
in the Middle East.
The competitive environment taking
shape in Etisalat’s domestic market has
undoubtedly driven this investment strategy.
Nevertheless, the policies that underlie the
strategy predated the liberalising legislation
of April 2004 and the Corporation has long
been committed to seeking international
investment that would enable it to expand
out of its UAE base and maintain its position
of leadership in the region.
Etisalat will continue to invest in foreign
markets to leverage its investments in
infrastructure and technology. This will allow
it to maximise shareholder value and build on
its successes in providing telecommunications
throughout the MENA region.
Etisalat will ensure that the interests of
all its stakeholders remain paramount and
continue to play a large part in driving
investment policies and decisions. The
Corporation’s success in the Saudi market
validates its ambition to become the major
force in the regional communication sector
while pursuing enhanced shareholder value.
In pursuing its investment goals it is the aim
of Etisalat’s management to maintain this
balance between corporate growth and return
to shareholders.
19
Etisalat AW proof 8
23/3/05
1:49 PM
Page 20
20
Thuraya
E-Vision
e-Marine
Thuraya Satellite Telecommunications
Company, which is one of Etisalat’s major
investments, is making strides to maintain
its leading position in the world’s mobile
satellite industry.
Thuraya provides satellite-based mobile
telecommunication services in more than
120 countries around the world. Through
a dynamic dual-mode satellite/GSM
system, Thuraya’s flexible offering enhances
connectivity both in urban hubs as well
as remote and rural areas.
In 2004, the Company continued to make
good progress, delivering positive financial
results while continuing to diversify products
and expand markets. The year has seen the
commercial launch of new product initiatives
and a healthy growth of 18% in its mobile
subscriber base.
Following the creation of a wellestablished handheld subscriber base, Thuraya
is actively pursuing a diversification strategy
to cater to the needs of a wider range of
market segments. The strategy is designed to
develop a larger and more integrated product
portfolio for a sustainable future growth.
Public Calling Office, a cost-effective
telephone solution for rural areas and Thuraya
Maritime, a new service for marine and
yachting industries, were both successfully
launched in 2004. This is being complemented
with a series of innovations embarked upon
in 2004 including Thuraya DSL, broadband
services and 2nd generation user terminals,
all of which to be introduced in 2005.
Also in line with its strategic growth
plans, Thuraya explored opportunities and
options for expanding coverage to the
promising East Asian market, a move that will
enable it to serve more than 70% of world’s
population. Steps have already been taken
to realise this objective and a final decision
on the Company’s approach to such a key
expansion will be reached in 2005.
The entertainment possibilities of
convergence, as part of a package including
communication and information, dominated
activities at Emirates Cable TV and Multimedia
(E-Vision) where the potential of advanced
triple-play technology to deliver the services
through a single wire became a reality. This
technology has many other applications.
E-Vision believes it has a real winner.
Triple-play, which combines voice,
video and high speed Internet - effectively
customers’ phones, televisions and computers
- represents the ultimate in combining
entertainment and communication. It allows
customers to receive all three services from a
single source, E-Vision’s cable into their home.
With the technology in place the whole
convergence package can deliver the goal of
a one-stop service that opens up a new range
of options for customers. The cable television
offering in the UAE will be transformed by
the rollout of convergence and E-Vision is
well positioned to benefit.
The expansion of the cable network in
2004 further improved this position and
by the end of the 12-month period it had
extended its reach to 300,000 homes and
increased subscriber numbers.
This Etisalat subsidiary is one of the
most advanced in terms of technological
development and uses fibre-optic and co-axial
cable networks in addition to broadband
wireless access (BWA) to deliver its services.
These have provided a platform for
E-Vision to focus on delivery and service
excellence and the result is an unrivalled
range of diverse programming for audiences
throughout the UAE. During the course of
the year, it added 13 new channels and now
offers a total of 200 channels in 21 languages.
It gave debuts to a variety of new services,
including e-Masala - a Hindi and Malayalam
free movie service. There was also an overhaul
of the existing services, with the likes of the
Information channel revamped to include
content for the first time.
e-View, a pay-per-view service, had
an equally impressive year in terms of
performance and exceeded expectations
in terms of sales. The broadcast hours for
e-junior, the children’s channel, were extended
and e-Games, the interactive gaming channel,
was given a thorough makeover with fresh
content and interactive features.
Etisalat’s e-Marine submarine cable subsidiary
began the prestigious 19,000 km SEA-ME-WE-4
cable project linking France and Singapore,
for which it is laying the 7,000 km Mumbai
to Jeddah section.
The project is expected to significantly
increase bandwidth capacity in the region,
which will lead to huge benefits for Internet
providers and customers in particular. Several
important steps were taken earlier in 2004
to facilitate the project, one of the most
significant of which was the acquisition of
the CS NIWA, a new deep sea installation
and maintenance ship.
The NIWA is the third largest cable-laying
vessel in the world and has the ability to
spend 60 days at sea and carry more than
6,000 tons of cable. e-Marine refitted the
ship with an advanced navigation and cable
management system and it is now equipped
with the latest technology and can lay cable
to within one meter of its designated location
on the seafloor.
e-Marine’s fleet completed the contract
signed in the first half of 2004 to install a
telecom cable between Kuwait and Iran and
a second to lay power cables for the National
Petroleum Construction Company (NPCC)
of the UAE.
The CS Etisalat completed a cable laying
project in a record 12 days that provides a
second submarine cable link between Qatar
and the UAE. This second link, which will
provide high-quality, secure Internet links, is
of particular significance for the development
of knowledge-based projects in Qatar.
Etisalat AW proof 8
23/3/05
1:49 PM
Page 21
The entertainment
possibilities of convergence,
as part of package including
communication and information,
dominated activities at Emirates
Cable TV and Multimedia (E-Vision)
where the potential of advanced
triple-play technology to deliver
the services through a
single wire became
a reality.
Thuraya Satellite
Telecommunications Company,
which is one of Etisalat’s major
investments, is making strides
to maintain its leading position
in the world’s mobile
satellite industry.
Etisalat’s e-Marine
submarine cable subsidiary
began the prestigious 19,000
km SEA-ME-WE-4 cable
project linking France and
Singapore, for which it is
laying the 7,000 km Mumbai
to Jeddah section.
Triple-play, which combines voice, video and high speed Internet
- effectively customers’ phones, televisions and computers represents the ultimate in combining entertainment and
communication. It allows customers to receive all three services
from a single source, E-Vision’s cable into their home.
21
Etisalat AW proof 8
23/3/05
1:49 PM
Page 22
Training and National Development
Human Resources
A Leadership Development Programme was
launched in 2004 to fast track an elite group
into senior positions. An initial intake of 20
UAE nationals, drawn from the Corporation’s
middle management, was enrolled on the
inaugural programme.
The initiative signalled the Corporation’s
commitment to creating a new top tier of
management to drive the transition to a
dynamic customer-focused corporate culture.
The carefully selected group faces an
intensive development programme, similar
to those in place in the top global corporates,
and its members can expect the same level
of rigorous training, testing and assessment.
Leadership development is only one strand
of the strategy that has been adopted to
offer Etisalat’s national staff suitable training,
structured careers and progression within
the Corporation. The human resources
department has done a great deal to frame
programmes that cater for all levels of
staff development while at the same time
meeting the requirement to boost the
total of national personnel.
It is a sign of the progress made that
Etisalat has a committed high quality
national staff and their experience has
helped to create the perception that the
Corporation is the UAE employer of choice
and opportunities. By the end of 2004
national staff were 43% of the total,
a proportion that rises significantly to 74%
among the Corporation’s senior management.
The target now is 50% emiratisation by the
end of 2005 and Etisalat is confident that
as the most active recruiter of nationals
in the country it will meet its goal.
A total of 430 national staff joined the
Corporation last year and it is increasingly
regarded as the top choice employer for
the elite of the UAE’s young, educated
nationals. Those who join from the UAE’s
Universities and Colleges have the option of
pursuing a two-year training and continuous
development programme which also offers
the possibility of international experience.
22
This programme, among others, helped
consolidate Etisalat’s reputation for HR
excellence. This was duly recognised towards
the end of last year when the Corporation’s
HR department received ISO certification
from International Det Norske Veritas (DNV),
an accredited ISO Certification Body. Etisalat’s
efforts to improve employment and create
opportunities for national citizens was also
commended during the third annual meeting
of the GCC Council of Ministers of Labour and
Social Affairs, held in Kuwait City in October.
Because of its commitment to long term
goals the Corporation also seeks to identify
and develop potential future staff. This led to
an initiative last year to create a grant-aided
summer placement programme for 100
students. This will lead, in due course, to full
employment with Etisalat.
Academy
Etisalat Academy, the Corporation’s flagship
operation to promote information technology
learning and a knowledge society in the
UAE, saw levels of activity climb during
2004 as demand for its courses took off.
In 2004 the Academy ran 2,207 events
that were attended by 25,962 staff from
the Corporation and its external clients.
These events took place over 84,696 training
days. The Corporation’s own staff training,
1,820 programmes for 16,213 attendees
over 70,350 training days, accounted for
a majority of the courses.
Of the total, 138 courses that were joint
events between Etisalat and external clients
while 249 were aimed at outside clients alone.
The division saw success at two levels.
First, it was able to offer a wider range of
training courses to Etisalat to improve the
skills of the Corporation’s personnel and
enhance its offering to the public. Second, it
was able to use its own ICT knowledge base
to develop courses, conferences, workshops
and seminars that could be offered to the
UAE community and beyond.
The Academy’s knowledge leadership was
increasingly recognised and it played a major
role in hosting MEITSEC, the region’s top
IT security conference, secured three major
training contracts, and launched the
development and training plan for Etihad
Etisalat in Saudi Arabia.
Its knowledge leadership also brought
into play for a series of specialised events,
international Certification Exams, Telecom/
ITU/IT industry meetings, user group training
events, diplomas and exhibitions. In the
course of the year it offered external
programmes to attendees from almost all
the Gulf states and Jordan, Syria, Egypt,
Yemen, Iran, Cyprus, Malta, Lithuania, UK,
Pakistan, India, Canada and the US.
The Academy’s local programmes were
attended by staff from almost all government
and major private sector organisations. In
December of 2004, the Etisalat Academy was
selected by the United Nations to represent
the UNCTAD-G77 eLearning initiative
throughout the Gulf Region, Middle East and
North Africa.
Not the least of the achievements during
the year was the evidence of its continuing
commitment to IT learning through its Kids
eSummer Programme. This proved even more
popular than in previous years and some 500
children attended over the course of the
three-month summer period.
23/3/05
3:39 PM
Page 7
“I joined Etisalat as a junior member
of staff. The knowledge I gained
subsequently, and skills I have picked
up, have transformed my career. I am
enormously proud to be a member
of this Corporation.”
Maryam Rashid Al Muhiri, Teamleader,
Abu Dhabi Region
“As a UAE national working for
Etisalat, I have to applaud its
commitment to social responsibility
and efforts to give something back
to the community.”
Noora Al Khaja, Sales Executive,
Etisalat, Dubai Region
23/3/05
3:40 PM
Page 8
“Working with Etisalat has given me
the confidence to cope with all
types of challenges.”
Saud Abdul Aziz Al Nemer,
Business Development Coordinator,
Etisalat, West Coast Region
“I feel proud to be part of Etisalat and
its role in revolutionising
telecommunications in the UAE.”
Ali Yousef Obaid,
Business Centre Manager,
Etisalat, Ras Al Khaimah Region
Etisalat AW proof 8
23/3/05
1:49 PM
Page 23
College of Engineering
The College of Engineering confirmed in 2004
that it had attained a new level of maturity
when it introduced a UAE Master’s degree in
Engineering, to be awarded based on original
research. A total of 12 students were
accepted for the Masters programme.
The development represented a significant
advance for the College and is a very important
addition to its five-year Bachelor of Engineering
undergraduate programme in Communication,
Electronics and Computer Engineering. The
addition of engineering research puts the
institution in the upper ranks of the country’s
education establishments, extends the scope
of the sector in the UAE, and opens new
options to students.
During the year the total number of UAE
students to graduate from the College since
it was set up in Sharjah in 1989 rose to 325.
Over the years the College of Engineering has
sent 21 of its students abroad to study. Six
have received Masters and PhD degrees and
subsequently returned to the College as
Assistant Professors.
The College was the first institution in the
Middle East to receive IEE accreditation from
the prestigious professional body for electrical
and electronic engineers in the UK and
British Commonwealth. It has remained an
independent institution but has a monitoring
committee which includes visiting professors
from prestigious universities around the
world. This ensures its degrees and certificates
are equivalent in standard to university
awards elsewhere.
Corporate Social Responsibility - CSR
Towards the end of October 2004 the
Corporation’s Executive Committee approved
the Internet for Schools initiative, an extensive
project to put all the UAE’s 750 government
schools and every private school online.
The Corporation, which has a close tie-up
with the Ministry of Education, took this
step in order to establish the Internet as an
integral part of the learning environment and
ensure every child in the UAE is familiar with
the technology from an early age.
Etisalat agreed to provide from its own
resources Internet connections and integrated
solutions such as connectivity, email and web
hosting for every UAE school. As part of the
package each school was to receive free
installation of BusinessOne, free CPE and a
2mb BusinessOne connection for a quarter
of the usual tariff.
Internet for Schools is a big undertaking.
It is a measure of Etisalat’s commitment
to operating as a socially responsible
organisation and engaging with its host
communities that it initiated and is now
actively engaged in implementing the project.
It is one of many in the Corporation’s CSR
portfolio, which includes specific projects tied
to government initiatives in areas such as
housing, community activities, sponsorships,
charitable donations and a contribution of
50% of annual profits to the Federal budget.
As the largest quoted company in the
country the Corporation recognises that it has
a duty to provide leadership across the board
by setting the highest standards in each of
its areas of operations, from employment
practices to corporate governance, ethical
standards to community engagement.
It is committed to leading the
development of a knowledge culture in
the UAE and to improving the nation’s IT
expertise through initiatives such as its
summer programme for children.
The Corporation’s involvement with
government extends beyond the contribution
to the Federal budget and last year saw it
partner with the Ministry of Education and
the Ministry of Finance on a range of socially
significant projects. Such partnerships saw
the Corporation assume a primary role in the
country’s long term education development
and through the Etisalat Academy and
eCompany become with the Ministry of
Finance one of the co-drivers of the Federal
eGovernment project.
The Corporation continued to be one of
the biggest sponsors of events and activities
in the country and again supported Dubai
Shopping Festival, Dubai Summer Surprises,
The Ramadan Festival in Sharjah, Ajman
Shopping Festival, Power Boat Speed Racing
events, Emirates Civilization Marathon, and
the Flower Show and Festival in Al Ain. It was
proud to be able to contribute once more to
organisations such as the Special Needs Care
and Rehabilitation Centre.
The purpose behind all these activities
was to make a difference to the communities
the Corporation serves and help create a
brighter future for all.
23
Etisalat AW proof 8
23/3/05
1:49 PM
Page 24
Towards the end of
October 2004 the Corporation’s
Executive Committee approved
the Internet for Schools initiative,
an extensive project to put all
the UAE’s 750 government
schools and every private
school online.
Etisalat Academy,
the Corporation’s flagship
operation to promote
information technology learning
and a knowledge society in the
UAE, saw levels of activity
climb during 2004 as demand
for its courses took off.
A Leadership
Development Programme
was launched in 2004
to fast track an elite
group into senior
positions.
While the inspiration came from the top, everyone, from
the junior staff to the most senior board member, showed the
same focus and commitment to the cause as the Corporation
moved forward into a new era.
24
Etisalat AW proof 8
23/3/05
1:49 PM
Page 25
Corporate Governance
The Board of Directors
The Corporation is managed by a Board of
Directors established under the Chairmanship
of the Minister of State for Financial and
Industrial Affairs and consists of nine members
in addition to the Chairman. Five of these
members represent the Federal Government
and the remaining members are elected for
a three year period by the non-government
shareholders. The Board of Directors shall carry
out the Corporation’s business and for such
purpose may exercise all the Corporation’s
authority except for those reserved by the Law
or the Articles of Association of the Corporation.
The General Assembly
The General Assembly is composed of all
shareholders in the Corporation. The General
Assembly is entrusted with approving the
Board’s Report on the Corporation’s activities
and financial position during the financial
year ended. The Assembly is also entrusted
with approving the External Auditors’ Reports,
discussing and approving the Balance Sheet
and the Profit and Loss Account for the
financial year ended, appointing the auditors,
and examining the Board’s recommendations
regarding the Corporation’s profits. The
General Assembly exercises all competencies
and powers of the Corporation within
the limits of the law.
The Executive Committee
The Executive Committee is appointed by the
Board of Directors in accordance with Article
20 of Etisalat’s Articles of Association. It is
empowered to take decisions on behalf of
the Board. Among the Executive Committee’s
functions and authorities are Organization
(oversee statutory, organisational and
employment matters and corporate
performance), Planning and Development
(oversee development projects, introduction
of new services, and approve the budget prior
to submission to the Board), Operation
(review efficiency of service, guide on
investment of surplus funds, revise service
tariffs and service terms), Projects (set the
terms for project agreements, approve
relevant tenders over AED 50 million and
approve project overruns and variations up
to AED 10 million), Purchases (approve
relevant purchases over AED 50 million).
The Audit Committee
The Audit Committee is established as a
subcommittee of the Board of Directors.
It is comprised of three independent Board
members and shall meet at least four times
a year. The purpose of the Audit Committee
is to monitor overall financial performance
and the integrity of the financial statements.
It assesses the adequacy and application of
internal control policies and procedures.
It oversees the Corporation’s financial risks.
It oversees and monitors the effectiveness
of the internal audit function. It monitors the
performance and independence of the external
auditors and recommends their appointment
or removal to the Board. In fulfilling its role,
the committee is to maintain free and open
communication between the directors, the
independent auditors, the internal auditors and
the financial management of the Corporation.
The Chief Executive Officer (CEO)
The CEO is responsible for the day to day
running of the Corporation within the rules
and directives approved by the Executive
Committee/Board of Directors. He signs
contracts and agreements and all other
documents on behalf of the Corporation
and he represents the Corporation before
courts. He sets corporate key policies,
prepares plans, and oversees financial and
administrative matters. He reports regularly
on the Corporation’s progress and affairs
to the Executive Committee and the
Board of Directors.
Acknowledgement
I am profoundly grateful to every member
of the Etisalat team for making 2004 such an
unqualified success. The Corporation enjoyed
the best results in its history with HE the
Chairman, the Board and the Executive
Committee providing the visionary leadership
and strategy that paved the way for an
outstanding year.
While the inspiration came from the top,
everyone, from the junior staff to the most
senior board member, showed the same
focus and commitment to the cause as the
Corporation moved forward into a new
era. Thanks to the unstinting efforts of all
involved, the transition was accomplished
seamlessly and the business moved to a
new level of performance.
I am deeply appreciative of the
contributions of all our stakeholders.
Together, we are leading the way to a brighter
future for the customers we serve, for the
Corporation and for the UAE.
Thank you.
Mohammed Hassan Omran
Chief Executive Officer
1 March 2005
The Impact of Law No.3 of 2003 on Etisalat
Law by Decree No. 3 of 2003 regarding the
Organization of the Telecom Sector came into
effect in April 2004. This Law established the
Supreme Committee to supervise the Telecom
Sector. The Supreme Committee has three
members, including its Chairman. The Law
further established the General Authority
for Regulating Telecom Sector. This is an
independent body entrusted to carry out,
under the guidance and the directions of the
Supreme Committee, the supervision and
regulation of the telecom services in the UAE.
The law repealed the exclusivity granted
to the Corporation by virtue of Law No. 1 of
1991 and opened the way for licensing new
telecom operators. According to the new law
the Supreme Committee and the General
Authority have replaced Etisalat as Regulator
for the Telecom Sector in the UAE.
25
Etisalat accounts proof 8
23/3/05
2:48 PM
Page 26
Independent Auditors’ Report to the Shareholders
We have audited the accompanying consolidated financial statements of Emirates Telecommunications Corporation (“the
Corporation”) and its subsidiaries (“the Group”) for the year ended 31 December 2004. These consolidated financial statements
are the responsibility of the Corporation’s management. 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 promulgated by the International Federation of
Accountants. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements give a true and fair view of the financial position of the Group as at
31 December 2004 and of the results of its operations and its cash flows for the year then ended in accordance with
internationally accepted accounting principles as required by the UAE Federal Act No. (1) of 1991 as amended by Decretal Federal
Code No. 3 of 2003.
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 stocks 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 2004.
KPMG
Chartered Accountants
United Arab Emirates
Munther Dajani (Reg No. 268)
1 March 2005
26
SAJJAD HAIDER & CO
Sajjad Haider (Reg No. 74)
PRICEWATERHOUSECOOPERS
Michael Stevenson (Reg No. 306)
23/3/05
2:48 PM
Page 27
Consolidated Statement of Income
For the year ended 31 December 2004
Notes
2004
AED’000
2003
AED’000
Revenue
3
10,433,779
9,225,747
Operating profit
Other income
4
3,297,862
119,780
2,801,014
71,604
3,417,642
17,633
2,872,618
15,015
3,435,275
2,887,633
(1,650,000)
(500,000)
(500,000)
(750,000)
(1,500,000)
(300,000)
(350,000)
(720,000)
Profit for the year
Unappropriated profit brought forward
Appropriations:
Dividends
Transfer to development reserve
Transfer to asset replacement reserve
Transfer to general reserve
4
14
14
14
Unappropriated profit carried forward
Earnings per share
Chairman
18
35,275
17,633
AED 10.4
AED 8.7
Khalaf Bin Ahmed Al Otaiba
Deputy Chairman
The notes on pages 30 to 39 form an integral part of these financial statements.
The Independent Auditors’ Report is set out on page 26.
27
23/3/05
2:48 PM
Page 28
Consolidated Balance Sheet
At 31 December 2004
Notes
2004
AED’000
2003
AED’000
ASSETS EMPLOYED
Fixed assets
5
8,605,542
8,669,399
Investments
6
2,172,690
315,556
7
8
9
86,386
1,568,799
6,980
141,496
7,801,763
94,010
752,894
16,485
102,557
7,916,789
9,605,424
8,882,735
4,829,111
1,041,712
825,000
4,344,462
886,537
750,000
6,695,823
5,980,999
2,909,601
2,901,736
402,558
369,058
13,285,275
11,517,633
3,300,000
2,800,000
2,900,000
4,250,000
35,275
3,000,000
2,300,000
2,400,000
3,800,000
17,633
13,285,275
11,517,633
Current assets
Stores
Debtors and prepayments
Loan to an associated undertaking
Amounts due from other telecommunications administrations
Bank and cash balances
Current liabilities
Creditors and accruals
Amounts due to other telecommunications administrations
Proposed dividend
10
11
Net current assets
Long term liabilities
Provision for staff terminal benefits
FINANCED BY
Share capital
Development reserve
Asset replacement reserve
General reserve
Unappropriated profit
12
13
14
14
14
SHAREHOLDERS’ FUNDS
Chairman
28
Khalaf Bin Ahmed Al Otaiba
Deputy Chairman
23/3/05
2:48 PM
Page 29
Consolidated Statement of Cash Flows
Notes
Cash flows from operating activities
Operating profit
Adjustments for:
Depreciation
Capital project written off
Net transfer to/(from) staff terminal benefits
Share of results of associated undertakings and provision
5
4
Changes in working capital:
Stores
Amounts due from/to other telecommunications administrations
Creditors and accruals
Net cash provided from operating activities
Cash flows from investing activities
Loan instalments repaid by an associated undertaking
Investments made during the year
Purchase of fixed assets, net
Interest income
2004
AED’000
2003
AED’000
3,297,862
2,801,014
1,236,096
191,490
33,500
(14,244)
1,424,124
(47,128)
85,705
7,624
(815,905)
116,236
484,649
1,747
108,515
16,298
473,581
4,537,308
4,863,856
9,505
(1,842,890)
(1,363,729)
119,780
7,165
(997,172)
71,604
Net cash used in investing activities
(3,077,334)
(918,403)
Cash flows used in financing activities
Dividends paid
(1,575,000)
(1,500,000)
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at 1 January
(115,026)
7,916,789
2,445,453
5,471,336
Cash and cash equivalents at 31 December
7,801,763
7,916,789
9
6
29
23/3/05
2:48 PM
Page 30
Notes to the Consolidated Financial Statements
1
Incorporation and activities
The Emirates Telecommunications Corporation Group (“the Group”) comprises the holding company Emirates Telecommunications Corporation
(“the Corporation”), its subsidiaries and its associated undertakings. The Corporation was incorporated in the United Arab Emirates, 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. The Corporation is owned by the
UAE Government and UAE nationals.
The principal activity of the Group is to provide telecommunications services, media and equipment including the provision of related contracting
and consultancy services to international telecommunications companies and consortia. These activities are carried out through the Corporation,
its subsidiaries and associated undertakings incorporated in the United Arab Emirates, the Kingdom of Saudi Arabia and Tanzania.
2
Significant accounting policies
The significant accounting policies adopted in the preparation of these consolidated financial statements are set out below:
a) Basis of preparation
The consolidated financial statements are prepared under the historical cost convention and in accordance with internationally accepted
accounting principles as required by the UAE Federal Act No. (1) of 1991.
b) Consolidation
Subsidiary undertakings, which are those entities in which the Group, directly or indirectly, has an interest of more than one half of the voting
rights and / or otherwise has power to exercise control over the operations, have been fully consolidated. Subsidiaries are consolidated from
the date on which effective control is transferred to the Group and are excluded from consolidation from the date of disposal. Intercompany
transactions, balances and any unrealised gains / losses between group entities have been eliminated in the consolidated financial statements.
Details of the subsidiary undertakings are provided in Note 15.
c) Associated undertakings
Associated undertakings are those companies over which the Corporation exercises significant influence but which it does not control.
Investments in associated undertakings are accounted for at cost less provisions for impairment in value, which are other than temporary
in nature, such provisions being determined and made for each investment individually. The Corporation’s share of results of associated
undertakings is reflected in the consolidated statement of income.
d) Fixed assets and depreciation
Fixed assets are stated at cost, less accumulated depreciation. Cost comprises landed cost of equipment and materials, including freight and
insurance, charges from contractors for installations and building works and direct labour costs incurred in the installation of exchanges and
underground plant.
The cost of fixed assets is depreciated from the date an asset becomes operational by equal annual instalments over the estimated useful
lives of the assets as follows:
30
23/3/05
2:48 PM
Page 31
Buildings:
Permanent - the lesser of 20 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
Earth stations / VSAT
Multiplex equipment
Power plant
Subscribers’ apparatus
General plant
Other assets:
Motor vehicles
Computers
Furniture and fittings
Household furniture
Years
20
10
15
15
15
5 - 10
5 - 10
10
5 - 10
10
5
3-5
2-5
3
4
4
4
Accelerated depreciation is provided on assets, which are likely to cease to be operational earlier than the expiry of the estimated
useful lives shown above.
Repairs and maintenance expenses are charged to the consolidated statement of income when the expenditure is incurred.
e) Other investments
Other long term investments are stated at cost and provision is only made when there is a diminution in the value, which is other
than temporary in nature, such diminution being determined and made for each investment individually.
f) Foreign currencies
Foreign currency transactions are accounted for at the exchange rates prevailing at the dates of the transactions. Foreign currency monetary
assets and liabilities are translated into UAE Dirhams at rates prevailing at the balance sheet date. Gains and losses arising on settlement and
retranslation of foreign currency balances are recognised in the consolidated statement of income.
g) Stores
Stores are valued at the lower of cost and net realisable value. Provision is made, where appropriate, for deterioration and obsolescence.
Cost is determined in accordance with the weighted average cost method.
31
23/3/05
2:48 PM
Page 32
Notes to the Consolidated Financial Statements continued
2
Significant accounting policies (continued)
h) Revenue
Revenue, in respect of telecommunications services, is accounted for in the period when the services are provided and is stated after adjusting
for amounts payable to and receivable from other telecommunications administrations and is net of discounts and rebates allowed.
Equipment rental charges are recognised as income over the period to which the charges relate.
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.
i)
Cash and cash equivalents
For purposes of the consolidated statement of cash flows, the Group considers all bank and cash balances with a maturity of less than
six months at the balance sheet date to be cash and cash equivalents.
3
Revenue
a) Revenue is stated net of discounts and rebates allowed and after deducting net outpayments to other telecommunications administrations
of AED 1,020 million (2003: AED 977 million) which comprise total outpayments of AED 1,820 million (2003: AED 1,648 million) less total
inpayments of AED 800 million (2003: AED 671 million) and discounts of AED 756 million (2003: AED 654 million).
b) Revenue also includes net income from sale of subscriber equipment of AED 8.6 million (2003: AED 9.6 million).
4
Profit for the year
2004
AED’000
Profit for the year is stated after charging:
Depreciation
Capital project written off
Contract costs
Share of results of associated undertakings and provision (Note 6)
Federal royalty
And after crediting:
Interest income
Contract revenue
1,236,096
191,490
26,965
(14,244)
3,417,642
119,780
65,880
The capital project written off relates to the transfer of the cost of construction of a University to the Government of Sharjah.
In accordance with the Cabinet decision No. 558/1 for the year 1991, the Corporation is required to pay a royalty, equivalent to 40%
of its annual net profit before such 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 royalty payable to 50%.
32
2003
AED’000
1,424,124
5,233
85,705
2,872,618
71,604
33,116
5
23/3/05
2:48 PM
Page 33
Fixed Assets
Buildings
AED’000
Plant and
equipment
AED’000
Motor
vehicles,
computers
& furniture
AED’000
Assets under
construction
AED’000
Total
AED’000
Cost
1 January 2004
Additions
Transfers
Write offs
Disposals
2,730,672
565
81,582
(5,853)
12,185,009
120,868
820,574
(161,011)
827,989
8,089
42,891
(25,427)
920,926
1,227,735
(945,047)
(191,490)
-
16,664,596
1,357,257
(191,490)
(192,291)
31 December 2004
2,806,966
12,965,440
853,542
1,012,124
17,638,072
Depreciation
1 January 2004
Charge for the year
Disposals
1,069,822
134,949
(5,781)
6,495,571
998,136
(160,127)
665,455
103,011
(24,939)
-
8,230,848
1,236,096
(190,847)
31 December 2004
1,198,990
7,333,580
743,527
-
9,276,097
Net book amount
31 December 2004
Capital stores
Total fixed assets
31 December 2004
1,607,976
-
5,631,860
-
110,015
-
1,012,124
243,567
8,361,975
243,567
1,607,976
5,631,860
110,015
1,255,691
8,605,542
Net book amount
31 December 2003
Capital stores
1,660,850
-
5,689,438
-
162,534
-
920,926
235,651
8,433,748
235,651
Total fixed assets
31 December 2003
1,660,850
5,689,438
162,534
1,156,577
8,669,399
33
23/3/05
2:48 PM
Page 34
6
Investments
Associated
undertakings
AED’000
Other
investments
AED’000
2004
AED’000
Net book amount at 1 January
Additions during the year
Share of results of associated undertakings and provision
217,474
1,714,300
14,244
98,082
128,590
-
315,556
1,842,890
14,244
401,261
(85,705)
Net book amount at 31 December
1,946,018
226,672
2,172,690
315,556
2004
AED’000
2003
AED’000
270,516
212,084
2003
AED’000
Represented by investments in the following companies:
a) Associated undertakings
i. Thuraya Satellite Telecommunications Company PJSC
The Corporation holds a 34.525% (2003: 34.525%) interest in Thuraya Satellite Telecommunications Company PJSC (“Thuraya”), incorporated
in the UAE as a private joint stock company. The Corporation’s holding in excess of 26% of interest in Thuraya is held for possible resale to other
interested parties. Whilst Thuraya has launched its satellites successfully and has commenced its operations, the Corporation, as a prudent
approach, has maintained a provision amounting to AED 200 million (2003: AED 200 million) at 31 December 2004 against this investment
due to uncertainty surrounding mobile satellite industry.
The corporate guarantee, issued by the Corporation, outstanding at 31 December 2004 amounted to US $ 166.7 million (2003: US $ 198 million)
in respect of part of a loan granted by a consortium of banks to Thuraya.
ii. Zanzibar Telecom Limited
2004
AED’000
2003
AED’000
10,358
5,390
The Corporation holds a 34% (2003: 34%) interest in Zanzibar Telecom Limited (“Zantel”), a private company incorporated in Zanzibar,
United Republic of Tanzania.
iii. Etihad Etisalat Company
2004
AED’000
2003
AED’000
1,665,144
-
The Corporation is one of seven founding shareholders of Etihad Etisalat Company (“EEC”) and holds a 35% ownership interest in EEC, a Saudi
Arabian joint stock company which was incorporated on 14th December 2004. EEC has been awarded a license to install, own and operate mobile
cellular networks for the provision of Public Mobile Cellular Services using the GSM and 3G networks in the Kingdom of Saudi Arabia.
34
23/3/05
2:48 PM
Page 35
According to the requirements of the Communications and Information Technology Commission (“CITC”) in Saudi Arabia, the Corporation
as the operator for EEC must maintain a 15% ownership in EEC for the duration of the management agreement (Refer note 16). The founding
shareholders have agreed that, they will not, for two fiscal years from the incorporation of EEC transfer shares except as permitted under the
articles of association of the company.
At 31 December 2004, the Corporation’s share of corporate guarantee provided to a syndicate of banks in respect of an Islamic financing facility
to EEC was approximately Saudi Riyals 2,625 million (AED 2,583 million).
The market value of the investment at 31 December 2004 was AED 12,949 million.
b) Other investments
i. New ICO Global Communications (Holdings) Limited
2004
AED’000
2003
AED’000
-
-
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 under the laws of Delaware, USA. New ICO is still in the development stage and hence
the full provision against this investment has been retained. The Corporation holds 596,864 Class A shares (0.3033% interest) and 1,101,482
convertible optional warrants in this new company.
ii. Qatar Telecom QSC
2004
AED’000
2003
AED’000
60,607
60,607
This represents the Corporation’s investment in one million shares of Qatar Telecom QSC. The market value of the investment at
31 December 2004 was AED 235 million (2003: AED 158.4 million).
iii. Sudan Telecommunications Company Limited
2004
AED’000
2003
AED’000
37,475
37,475
This represents the Corporation’s investment in 2.14 million shares (4.6% holding) (2003: 1.79 million shares, 4.6% holding) in Sudan
Telecommunications Company Limited, Sudan. The estimated market value of the investment, according to the local stock exchange,
at 31 December 2004 was AED 171.6 million (2003: AED 100 million).
iv. Dubai Global Sukuk FZCO
2004
AED’000
2003
AED’000
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 bear an annual rental in relation to six month US $ LIBOR plus 0.45% and mature in November 2009.
The market value of these certificates at 31 December 2004 was AED 129.1 million (US $ 35.1 million).
35
23/3/05
2:48 PM
Page 36
7
Stores
Subscriber equipment
Maintenance and sundry stores
8
2004
AED’000
2003
AED’000
31,427
54,959
35,679
58,331
86,386
94,010
2004
AED’000
2003
AED’000
417,037
1,134,524
17,238
462,520
280,697
9,677
1,568,799
752,894
Trade debtors
Other debtors and prepayments
Contract debtors and retentions
Included in other debtors and prepayments is an advance of AED 685.7 million to Etihad Etisalat Company, an associated undertaking incorporated
in the Kingdom of Saudi Arabia. This advance, which is interest free, is earmarked to contribute towards the Corporation’s share of the proposed
rights issue which will take place in 2005.
At 31 December 2004, the amount due from associated undertakings was AED 141.4 million (2003: AED 35.5 million) and is included under
other debtors and prepayments.
9
Loan to an associated undertaking
The Corporation has provided a loan facility of AED 25.7 million (US $ 7 million) to Zantel, an associated undertaking, to finance the purchase of
telecommunication equipment. The loan is secured by a charge over all assets of the undertaking and carries an interest rate of LIBOR plus 1.5%.
As from March 2004, repayment of the loan has been rescheduled with a monthly amount of AED 734,800 (US $ 200,000). An amount of
US $ 2.59 million was received during the year.
10 Bank and cash balances
Bank and cash balances mainly comprise short term deposits, denominated primarily in UAE Dirhams, with financial institutions and banks
operating in the United Arab Emirates. Interest is earned on these deposits at prevailing market rates.
36
23/3/05
2:48 PM
Page 37
11 Creditors and accruals
Creditors
Accrued expenses
2004
AED’000
2003
AED’000
4,095,589
733,522
3,616,765
727,697
4,829,111
4,344,462
12 Provision for staff terminal benefits
Provision is made for staff terminal benefits on the basis of the UAE Labour Law, except for UAE National staff who are members
of the UAE Federal Pension Scheme into which the Group makes a contribution.
13 Share capital
2004
AED’000
2003
AED’000
Authorised:
400,000,000 ordinary shares of AED 10 each
4,000,000
4,000,000
Issued and fully paid:
330,000,000 ordinary shares of AED 10 each
(2003: 300,000,000 ordinary shares of AED 10 each)
3,300,000
3,000,000
Balance at 1 January
Bonus issue of 30,000,000 fully paid shares of AED 10 each.
On 5 April 2004, the shareholders at the extraordinary general meeting
approved the issue of one bonus share for every ten shares held.
3,000,000
3,000,000
300,000
-
Balance at 31 December
3,300,000
3,000,000
37
23/3/05
2:48 PM
Page 38
14 Reserves
Development
reserve
AED’000
Asset
replacement
reserve
AED’000
Balance at 1 January 2004
Issue of bonus shares
Appropriation from profit
2,300,000
500,000
2,400,000
500,000
3,800,000
(300,000)
750,000
8,500,000
(300,000)
1,750,000
Balance at 31 December 2004
2,800,000
2,900,000
4,250,000
9,950,000
General
reserve
AED’000
Total
AED’000
15 Subsidiary undertakings
a) Emirates Telecommunications and Marine Services FZE (“the Establishment”) was incorporated in the Jebel Ali Free Zone, Dubai on 27 June 1998
and is a wholly owned subsidiary of the Corporation. The Establishment commenced operations effective 27 June 1998.
b) Emirates Cable TV and Multimedia LLC (“the Company”) was incorporated in the United Arab Emirates on 11 July 1999 and is a wholly owned
subsidiary of the Corporation. The Company commenced commercial operations on 15 April 2000.
16 Related party disclosure
Related parties include associated undertakings of the Corporation. Pricing policies and terms of these transactions are approved by the
Corporation’s management. The Corporation entered into the following related party transactions with associated undertakings :
Management fees and other income earned amounted to AED 17.9 million (2003: AED 3.7 million).
In prior years, the Corporation provided a term loan of AED 25.7 million to an associated undertaking at an interest rate of LIBOR plus 1.5%.
This has resulted in an interest income of AED 1.8 million for the year ended 31 December 2004 (2003: AED 2.6 million).
The Corporation has provided primary gateway facility to Thuraya including maintenance and support services. A total amount of AED 23.4 million
(2003: AED 23.7 million) was charged to Thuraya for the use of this facility.
Pursuant to CITC’s licensing requirements, EEC (then under incorporation) had entered into a management agreement (“the Agreement”) with the
Corporation as its operator effective from 14th August 2004. The Agreement requires the Corporation to provide services comprising the provision of
executive and senior management services, implementation of the network roll-out programme, management of the capital investment programme,
provision of customer operations, execution of Saudisation, establishment of national distribution channels, and licensing of the intellectual property
rights. The Corporation will receive an annual management fee of AED 36.7 million (US $ 10 million) for 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.
38
23/3/05
2:48 PM
Page 39
17 Commitments and contingent liabilities
The Board of Directors has approved future capital projects and investments to the extent of AED 2,815 million (2003: AED 3,629 million),
of which AED 361.8 million (2003: AED 418.5 million) have been committed at 31 December 2004.
At 31 December 2004, the Group’s bankers had issued performance bonds and advance payment guarantees, other than that disclosed in Note 6,
for AED 42.1 million (2003: AED 14.0 million) in relation to contracts.
A consortium led by the Corporation has been awarded the second license for fixed line and data telecommunication services in the Republic
of Sudan. At 31 December 2004, the Corporation had a commitment to pay the license fee of AED 218.7 million (Euro 45 million) which will be
subsequently recovered in part from other members of the consortium.
18 Earnings per share
Net profit for the year (AED’000)
Number of shares (Number in ’000)
Earnings per share (AED)
2004
2003
3,417,642
330,000
10.4
2,872,618
330,000
8.7
Earnings per share are calculated by dividing net profit for the year by the number of shares in issue during the year. The earnings per share
for 2003 has been adjusted for the bonus shares issued during 2004.
39

Etisalat AW proof 8

Transcription

Similar documents

Offering of AED 550,000,000 Ordinary Shares through an Initial

Project Description: In 2008 Hoyne Savings Bank realized that their

NewsFlash AED group 09_2014

Hawaiian Party

MEMBERSHIP APPLICATION

In2m pr1 - Home of Kelly McNulty

OPA! GREEK FESTIVAL AT AL RAHA BEACH HOTEL

TM3000-TableTopSEM-BrochureHTD-E188Q

Ecocarat - Guocera

LIFELINE AED® Semi-automatic Defibrillator

Code of Practice