Annual report_V10 5.indd

Transcription

Together Forward
Annual Report 2011
Reports and Consolidated
Financial Statements
for the year ended 31 December 2011
167 million
Aggregate Subscribers
32.2 AED billion
Revenue
10.4 AED billion
Operating Profit before Federal Royalty
5.8 AED billion
Net Profit
4.3 AED billion
Table of contents:
1.
2.
3.
4.
5.
6.
Business Overview
Chairman Statement
Board of Directors and Executive Committee
Chief Executive Officer Statement
Operational Highlights 2011
Management Review
• Group Commercial Initiatives
• Etisalat UAE
• International Operations
• Network
• Etisalat Services Holding
• Human Capital
7. Corporate Governance
8. Independent auditors’ report to the shareholders
9. Consolidated income statement
10.Consolidated statement of comprehensive income
11. Consolidated statement of financial position
12.Consolidated statement of changes in equity
13.Consolidated statement of cash flows
14.Notes to the consolidated financial statements
15.Notice of General Annual Shareholders’ Meeting
CAPEX
60fils
Dividend per share
Head Office:
Etisalat Building
Intersection of Zayed The 1st Street and
Sheikh Rashid Bin Saeed Al Maktoum Street
P.O. Box 3838
Abu Dhabi, UAE
Telephone: +971 2 6283333
Fax: +971 2 6317000
Telex: 22135 ETCHO EM
etisalat.ae
Regional Offices:
Abu Dhabi, Dubai, Northern Emirates
2
Business Overview
Awards - Corporate
2006
Awards - Innovation and Engineering
Best Operator
IT Weekly Awards
Best ICT Services Company
Network News Innovation Awards
Best New Technology
Best Operator
Windows User Middle East Awards
Best ISP
World Communications Awards
Best International Carrier
Genesys Customer Innovation Awards
Customer Innovation Award
Arabian Business Achievement Awards
Best Middle East
Telecommunications Company
Comms MEA Awards
Best Overall Operator
2007
Telecom World Middle East Awards
2008
2009
SAMENA Telecommunications Council
Best Quality of Services
Operator of the Year
Best FTTx/GPON Operator
of the Year
Best Mobile Operator
International Business Awards
Best Multinational Company Middle East & Africa
Telecoms World Middle East Awards
Best Value Added Service
SAMENA Telecommunications Council
Best Telecom Company
MENASA
Comms MEA Awards
Most Innovative
Non-Voice Service
Best Operator
Middle East Business Leaders Summit
International Leader in
Telecommunications Sector –
Asia & Africa’
Arab Achievement Awards
3
2007
TM Forum Awards
2010
2011
2006
2009
Best FMC Operator of the Year
SAMENA Awards
2010
Leader in Telecoms
Most Innovative Company
African Investor of the Year
Africa Business Awards
Asia Brand Employer Awards
Training Excellence
SAMENA Awards
Technical Leadership
2011
Best Customer Experience
Provider of the Year
Comms MEA Awards
Fixed Line Operator of the
year
Global Telecom Business Innovation Awards
Video Services
TMT Finance Middle East
Best Broadband Provider
COMMS MEA
Best Fixed Line Provider
4
Business Overview continued
Awards - Marketing and Customer Care
Awards - Management
Design Week Benchmark Awards
Best Brand - Telecoms Sector
Abu Dhabi Economic Forum, Al Iktissad Wal Amal
Comms MEA Awards
Best Customer Care
CEO Middle East Awards
2006
Lifetime Achievement Award
2008
2007
2008
CEO Middle East Awards
Award for CSR
Middle East Excellence Awards Institute
Best Customer Care Provider
Comms MEA Awards
Best Brand
Finance Asia Awards
Best India Deal
2009
2009
2010
2006
Superbrand Council
Superbrand
Middle East Business Global
Competitiveness Excellence Award
Best Customer Care Provider
Best Telecom Operator Leader Award
SAMENA
Time Out Dubai
Best Customer Care
CEO of the Year IT & Telecoms
CSR Awards
Best Community Programme
Lifetime Achievement Award
Honorable mention – Green Company
World Communications Awards
Best CEO
Leadership in Corporate Social
Responsibility
CMO Asia Awards
Best Telecoms Brand
Comms MEA Awards
Best Operator
Shortlisted - World Communications Awards
Social Contribution
2010
Best Chairman
Honorable Mention Best CFO
Honorable Mention Best Executive
2011
Best Chairman
Best Customer Care
2011
Asian Brand Employer Awards
5
Honourable Mention Green and CSR Programme
Asia’s Most Preferred Brand
6
Business snapshot
Awards - Carrier and Wholesale
Etisalat is a multinational, blue-chip organisation with operations
in 17 countries across the Middle East, Africa and Asia.
2008
Capacity Awards
2009
2010
2011
Capacity Awards
Best Wholesale Provider
MENA
An estimated 2 million people benefit from regular work
supplying Etisalat or its customers, including 53,000 who are
directly employed by the company. Etisalat now has access to
a population of more than eight hundred million people, and
its satellite network provides services over two thirds of the
planet’s surface.
Etisalat’s international acquisition programme began in earnest
in 2004 by winning the second mobile license, and the first 3G
license in Saudi Arabia. Since then the company has witnessed
rapid expansion positioning Etisalat as one of the world’s fastest
growing operators, with its subscriber numbers rocketing from 4
million in 2004 to 167 million at the end of 2011.
For nearly 40 years, Etisalat has helped the UAE sustain a
position as the region’s hub for business, trade and foreign
investment by providing reliable and high quality services. It
is one of the global telecommunication industry’s innovation
pacesetters - powering its home country into the Top 10 nations
list by providing the latest technologies first.
Etisalat is a pioneer in next-generation networks for both fixed
line and wireless and is in the process of deploying a nationwide
fibre optic system in the UAE that includes enough cable to
stretch to the moon and back - two and a half times.
Etisalat is also in the process of launching 4G mobile services
in the UAE, and today operates the Middle East’s largest LTE
network. Presently Etisalat offers both the Middle East’s fastest
fixed line broadband service with speeds of up to 30Mbps to the
home, and the highest speed mobile broadband connectivity.
This technological expertise has helped Etisalat capture
significant market share as it expands across the region, most
notably in Egypt and Saudi Arabia where the introduction of
7
mobile broadband services, including video call and mobile TV,
has changed market dynamics and provided affordable internet
access for millions.
Etisalat is pioneering several advanced ‘green’ technologies
and is a regional leader in providing environmentally friendly
information and communication solutions. This includes smart
building technologies, the latest Machine-to-Machine (M2M)
solutions. and the deployment of alternative power within its
regional networks.
Etisalat is also ensuring that its infrastructure meets the highest
international standards, and its nationwide fibre optic network
in the UAE is expected to reduce carbon emissions and energy
consumption by over 80% and 70% respectively.
Etisalat is committed to the principles of corporate social
responsibility and is partnering with many governments and
non-government organisations to increase access to education
and health care via technology.
Etisalat is well-known for its support of people with special
needs. It is a shortlisted finalist in the 2011 Global Mobile Awards
for its visual contact centre service which uses 3G technology
and sign language to provide support to the hearing impaired.
As a result, Etisalat has been named ‘Best Overall Operator’
in the Middle East 10 times since 2006, and was named Best
International Carrier at the World Communications Awards
in 2008.
It has won numerous accolades for its innovative marketing,
having been awarded for ‘Best Brand’, ‘Best Customer Service’
and ‘Best CSR Programme’. Etisalat’s management team is also
well-celebrated with its Chairman, Mohammad Omran, receiving
the top accolades in 2010, at both the International Business
Awards and the World Communications Awards.
8
•The Emirates
Telecommunication
Corporation is founded.
•The ownership
structure changes:
The United Arab
Emirates government
gets a 60% share in
the corporation and
the remaining 40%
is publicly traded.
9
•The UAE central
government issues
Federal Law No.
1, which gives the
corporation the
right to provide
wired and wireless
telecommunications
services in the country,
and between UAE and
other countries.
•Internet services are
rolled out across the
country, another first
in the region.
•Etisalat opens its SIM
card factory, Ebtikar, in
Ajman - now regarded
as one of the best
industrial organisations
in the UAE and a
leading provider of
smart card solutions.
•e-Marine is founded to
provide maintenance
and services to the
growing number
of international
telecommunications
cables passing through
the Gulf.
•Mobile subscribers
exceed the 1 million
mark as mobile data
services is introduced
using eWap.
•Etisalat introduces the
E-Vision brand for its
cable TV services.
•Etisalat Academy is
established to provide
professional and
technical training.
•Etisalat wins the
second license to
operate in Saudi
Arabia thereby
introducing Etihad
Etisalat – Mobily. It
also buys a stake in
Canar, a new fixed line
operator in Sudan.
•Etisalat subscribers
reach 2 million.
•It develops its mobile
network to offer GPRS.
•Etisalat achieves
500,000 broadband
subscribers, and mobile
subscribers in the UAE
exceed 7.2 million.
•Etisalat offers the
iPhone across the UAE
and Saudi Arabia, for
the first time.
•Etisalat acquires Tigo,
a Sri Lankan operator,
which is later rebranded
to Etisalat Lanka.
2011
2010
•Etisalat introduces
the first real 4G (LTE)
experience to its
customers in the UAE
2009
2008
•Etisalat acquires a
stake in a green-field
operator in Nigeria,
the largest and
fastest growing
market in Africa.
•It also invests in
Excelcomindo, one
of the leading mobile
service providers in
Indonesia.
•UAE mobile
subscribers exceed
6.7 million and
internet penetration
crosses the 60%
mark. Etisalat
introduces mobile
TV and officially
launches its wholesale
business unit as ‘The
Smart Hub for the
Middle East’.
2007
2006
2002
2000
1999
1998
•Etisalat’s mobile
subscribers exceed
800,000.
•The Middle East’s first
broadband Internet
service using the latest
ADSL technologies is
introduced.
•Etisalat buys a stake
in Tanzanian operator
Zantel, its first step
towards becoming a
major international
telecoms group.
1996
1995
1991
1989
1983
1982
1976
•Etisalat establishes
the Etisalat University
College to create a
talent pool of
engineers to drive its
future growth.
•The Middle East’s
first GSM service is
introduced in the UAE.
Etisalat also launches
Emirates Data Clearing
House, now one of
the world’s leading
clearing houses providing a complete
solution to GSM
operators to provide
roaming facilities
to their customers
in turn
.
1994
•Emirates
Telecommunications
Corporation launches
the Middle East’s first
mobile network.
•Etisalat becomes
one of the founding
investors in satellite
telecommunications
provider, Thuraya.
2004
Timeline - History of Etisalat
2003
•1 million new
customers are added
in the year, bringing
the total number
of subscribers
for Etisalat’s UAE
operations to
3 million.
•Etisalat launches the
Middle East’s first 3G
network, and offers
MMS services to its
customers.
2005
•Subscribers exceed
4.5 million, which
equates to mobile
penetration exceeding
100% for the first
time. Internet
adoption is also on
the increase and
51% of households
have access.
•Etisalat acquires
a stake and takes
management
control of PTCL, the
incumbent operator in
Pakistan.
•Etisalat expands
into West Africa by
taking a stake in
Atlantique Telecom
whose operations in
Benin, Burkina Faso,
the Central African
Republic, Gabon, Ivory
Coast, Togo, and Niger
catapult Etisalat’s
participatory markets
into double figures.
•Etisalat wins the third
mobile license in Egypt
•Etisalat deploys new
and plans to introduce
services across its fibre
the country’s first
network including
3G network.
3DTV, making the UAE
•It is also awarded a
one of the first five
•Etisalat successfully
license to provide
countries in the world
takes a stake in Swan
mobile services in
to offer this service.
Telecom, which is later
Afghanistan.
•Etisalat UAE starts
renamed Etisalat DB.
•In the UAE, Etisalat
offering faster mobile
•Etisalat completes the
begins offering
broadband speeds using
rollout of a nationwide
BlackBerry®services.
HSPA+, and announces
fibre optic backbone
•Etisalat Services
commercial trials of LTE.
over which next
Holding is formed
generation services will
to manage eight
be provided in the UAE.
business units that
•Etisalat is named
offer mission-critical
‘Largest Carrier in the
telecoms related
services to the industry. Middle East’ in the
Financial Times Top
This includes EDCH,
500 list.
e-Marine, Ebtikar,
Etisalat Academy,
E-Facility Management,
e-Real Estate, Etisalat
Directory Services
and Tamdeed.
10
Chairman’s Statement
as near field communication (NFC), money transfer facilities, and machine-to-machine (M2M), which are made possible through
cloud computing. The UAE is thus primed to become a data centre hub offering such services domestically and abroad.
I am pleased to present
the performance
results of the Emirates
Telecommunications
Corporation ‘Etisalat’
for the past year.
The following is a
summary of results
for the year ended
31 December, 2011:
• Aggregate subscribers, including subsidiaries and
associates, grew annually by 22% to exceed 165 million by
December 2011;
• Consolidated revenue increased 1% to reach AED 32.2 billion;
• Operating profit before Federal Royalty decreased 29% to
AED 10.4 billion including a one-off impairment on Indian
operation; Operating profit before Federal Royalty amounts to
AED 13.5 billion, representing a decrease of 8% from 2010;
• Net profit after Federal Royalty decreased 23% to AED 5.8
billion, an EPS of 74 fils; Excluding the one-off impairment
on Indian operation, net profit after Federal Royalty amounts
to AED 6.9 billion and an EPS of 87 fils, representing a
decrease of 10% from 2010;
• Net cash position of AED 3.3 billion, composed of AED 10.0
billion in cash and AED 6.7 billion in borrowings;
• Capital expenditure of AED 4.3 billion, representing 13% of
the consolidated revenue;
Reported earnings for the year were noticeably impacted by the
Supreme Court of India’s recent decision to cancel 122 licenses
– including that of our Indian subsidiary Etisalat DB. Although
our investment in India took place long after these licenses
were issued, we reflected a loss for impairment in our year-end
results, in line with International Financial Reporting Standards
(IFRS). In the meantime, Etisalat continues to assess the legal
consequences of the Supreme Court’s decision and Etisalat’s
strategic options in India.
Notwithstanding this critical matter, Etisalat’s overall financial
results show a steadily increasing revenue base from its diverse
portfolio of operations. Excluding the impact of impairment,
operating profits before federal royalty - although down from
last year - remained robust at a margin of 42%. In addition, the
Corporation maintained its historically strong cash position,
allowing it to reaffirm its investment-grade credit ratings in
11
We participated in 2011 in a national dialogue to define the vision for the next-generation ICT industry in the UAE, and put forward
a recommendation on the required enablers. This vision aims to position ICT as a key driver of socioeconomic development and
regional competitiveness by effectively addressing prevailing market and industry trends and capturing stakeholders’ aspirations.
The dialogue addressed a range of key policies and initiatives, including e-Government, e-Literacy, and national network security.
We firmly believe in the impact of ICT in accelerating economic growth, stimulating economic and social innovation, enhancing
efficiency across all facets of our society and economy, encouraging new fields of collaboration, and simply improving everyday’ s
lives. In fact, the enactment of such a vision could double the contribution of ICT to the UAE economy over the next five years.
From a broader viewpoint, we continue to believe in the latent demand and potential of the telecommunications industry. It is
expected that the world’s population will reach 7.2 billion by 2015. There will be roughly the same number of connected devices in
use, many of which will be non-voice, as well as more than 50 billion machines that can be connected. Experts predict that this will
drive demand for mobile data up to 26 times its current levels.
their annual review. In light of these results, and in line with the
policy of several years, the Board has proposed dividends of 60
fils per share, a payout of 81% of earnings per share.
Operating margins have witnessed strain due to a rebalancing of
contributions from Etisalat’s geographic and service portfolios.
Traditional growth in mobile voice operations in the domestic
market has tapered due to market saturation and competitive
pressures. The Corporation has countered this challenge by
focusing on terminal resale to lock in customers over extended
periods of time - positively impacting both immediate and
future revenues.
In spite of the impact of the developments in India on this
year’s financial results, Etisalat’s growth value today remains
primarily derived from emergent international operations, as
well as domestic data services. Etisalat has been quick to take
advantage of this trend by prudently investing in its overseas
networks, and in the UAE’s broadband infrastructure, with a
focus on enhancing network capacity for the increasing demand
for data usage.
Etisalat allocated AED 1.8 billion - more than 40% of its capital
expenditure - to its UAE operations in 2011. As one of the UAE’s
key institutions, Etisalat has an unwavering commitment to
provide a state-of-the-art related telecommunications network
to the citizens of the UAE.
We strongly believe that the excellence of the communications
network directly correlates to the economic growth and
prosperity of the country. Etisalat now lays claim to the
complementary combination of a high-speed fiber backbone
and an LTE mobile network, providing reliable connectivity up to
the last mile between base station and customer. The advanced
network will allow us to reliably provide innovative services such
If we take the example of Etisalat Misr, the levels of mobile data usage were negligible when Etisalat launched in Egypt in 2007.
Today, only four years later, Etisalat Misr’s network carries more than 30 terabytes per day, which we estimate to be half the total
market share. Four years from today - at this rate of growth - Etisalat will require a more advanced network with larger capacity
to handle higher levels of usage. As a result, Etisalat will continue a similar level of investment over the next five years to handle
increasing demand for mobile data, in the UAE, and across its international operations.
The Corporation is also engaged in discussions with over-the-top (OTT) players to develop new business models where all players
can participate evenly, and benefit from the network investments.
The telecommunication industry is constantly evolving - transforming economies, businesses, communities, and the way in which
people live, work, and play. Our ongoing mission is to bring the future of communications to the most dynamic regions in the world,
no matter how challenging or demanding.
As you are well aware, the Middle East has witnessed turbulent political upheavals during the past year. The turmoil has had both
direct and indirect impact on risk in the regions where we operate. In this regard, Etisalat is fortunate to be anchored within the
resilient and secure economy of the UAE, and to own a diverse international portfolio across 17 markets, that will cushion against
any potential impact of such events. Nevertheless, we are hopeful that the current situation will be a precursor to a new era of
greater stability and prosperity in the region.
Last but not least, I would like to emphasise that Etisalat is a home for remarkable people. Our strategy to attract the best talent
has paid off, and it will help realise our objective of becoming one of the world’s leading telecommunications companies. We owe
our success to the talented teams who focus on delivering next-generation of services to transform the lives of the people on our
world-class networks. I would like to extend my sincere thanks to all of Etisalat’s staff for their dedication and ingenuity.
Sincerely,
Mohammed Hassan Omran
Chairman
12
Board of Directors and Executive Committee
H.E. Mohammad Hassan Omran
Chairman
Chairman Executive Committee
H.E. Khalaf Bin Ahmed Al Otaiba
Vice Chairman
H.E. Mubarak Rashed Al Mansouri
H.E. Omar Saif Mohammad Al Huraiz
Member
H.E. Ahmad Bin Eisa Bin Nasser Alserkal
Member
Member Executive Committee
H.E. Abdul Rahman Hassan Al Rostomani
Member
Member
H.E. Hamad Mohammad Al Hurr Al Suweidi
H.E. Abdulla Mohammad Saeed Ghobash
Member
Member
H.E. Sheikh Ahmed Mohammad Sultan
Bin Suroor Al Dhaheri
H.E. Shoaib Mir Hashim Khoory
Member
Member
H.E. Saeed Mohamed Al Sharid
Member
Mr. Hassan Osman Sid Ahmed
Acting Corporation Secretary
13
14
Chief Executive Officer’s Statement
This strategy translates into a cross-functional portfolio of
tactical objectives that will involve the entire organisation,
with an aim to increase revenues and optimise costs in existing
business activities, while capturing growth potential that
has not yet been leveraged through our Group. Success of
the initiatives will also be measured through improvement in
operational metrics pertaining to quality of services, customer
experience and market positioning.
It gives me great
pleasure to review
with you the
2011 financial and
operational results
of the Emirates
Telecommunications
Corporation, ‘Etisalat’.
Our operations demonstrated growth in terms of both size
and revenue, reaching more customers and attracting higher
revenues across our international operations. The aggregate
subscribers, including subsidiaries and associates, reached over
165 million. Group revenues increased by 1% to reach AED
32.2 billion, driven by growth in our international operations
that now contribute more than 26% of consolidated revenue.
Excluding the one-off impairment of our Indian investment
following the cancellation of our subsidiary’s licenses, our
operating profit margin before Federal Royalty came in at 42%,
compared to 46% in 2010. Etisalat achieved a net profit before
Federal Royalty, excluding impairment of Indian investment
of AED 13.7 billion. Net profit after Federal Royalty, excluding
impairment of Indian investment, amounted to AED 6.9 billion
and EPS of 87 fils, compared to AED 7.6 billion and 97 fils in
2010. Meanwhile, capital expenditure decreased by 27% to reach
AED 4.3 billion, representing 13% of the current year’s revenues.
In the UAE, our operations witnessed further competitive
pressure, especially in the mobile segment where revenues
declined by 3% to AED 23.5 billion. While loss of market share
in a two-player market was inevitable as an incumbent operator,
we have retained a dominant share of revenues due in large part
to the loyalty of Etisalat’s higher revenue-generating customers,
based on the superior services and quality of the network. We
were also notably able to achieve a healthy gain in our mobile
subscriber base during the final quarter of the year, thanks to
continuing efforts to revamp of our sales channels and the
focus on value proposition in our latest mobile offerings.
We have also witnessed strong growth in the data and internet
segments. Their combined revenues have grown 20% to reach AED
8.0 billion, contributing 34% of total UAE revenues. To capitalise
on this trend, the Corporation spent AED 1.8 billion during the year
on infrastructure, mainly to enhance the fiber-optic network and
develop the LTE core and access network.
15
The programme includes but is not limited to deployment of
a Group talent management programme, consolidation of
purchasing to lower total procurement spend, establishment
of M-Commerce across operations, an aligned brand portfolio
strategy, and capturing international wholesale synergies from
consolidation. The programme will be supported through a
holistic knowledge management strategy across the Group.
This investment was highlighted by the launch of the first real 4G
(LTE) experience to our customers in the UAE through Etisalat’s
new LTE USB modem. Etisalat has deployed nearly 1,000 base
stations and its current LTE footprint spans major cities covering
70% of the population. We plan to continue ensuring that our
customers have access to the most advanced technology available
in the world, through a segmented approach that considers
particular needs of different demographic and business sectors.
Etisalat has a huge potential for growth at a global level, and
this remains one of our key objectives. Our operations abroad
achieved AED 8.5 billion in revenues during 2011, registering a
healthy growth of 17% and validating the anticipated potential
of our international investment portfolio. International revenues
for the year accounted for 26% of consolidated Group revenues,
led by the solid performance of Etisalat Misr and Atlantique
Telecom. On the operating profit level, before impairment,
international operations delivered an increasing share to group
results, although margins from these operations are expectedly
lower than our home market due to the lower customer ARPU
(average revenue per user) nature of these markets. In addition,
these operations are still in the build up stage.
In line with the programme, Etisalat signed a Strategic
Partnership Agreement with Telefonica to collaborate on
a range of key areas that harness their capabilities and
expertise. Under the terms of the agreement, we will establish
mechanisms to draw on each operator’s experience in various
strategic areas, including collaboration on technological
standardisation, new global technology initiatives, R&D, and
new emerging products and services designed to capture
digital growth opportunities such as M2M, financial services or
cloud-based services. We will also cooperate on procurement,
international capacity and wholesale services, as well as offer
enhanced support for multinational customers by taking
advantage of the benefits of the Telefonica Partners Program.
Etisalat also initiated five global framework agreements to
enable significant savings and technical alignments across the
organisation, and finalised a global managed network services
(GMNS) agreement with two major vendors to consolidate
network maintenance and repairs in its global operations. These
agreements, along with aggressive cost optimisation initiatives
in several operations launched during the year, are anticipated
to yield considerable savings over the next few years.
The year 2011 also saw a transition into our new Group
operating model, involving changes to organisation,
governance, and processes. Management is well aware that
the organisational structure has a direct impact on many
aspects of daily business, and that change will be necessary to
cope effectively with the dynamic nature of our markets. This
organisational change will include the creation of several new
Group functions, with the purpose of bringing together related
departments under one umbrella to streamline processes.
On a regional level, two new operating clusters - Asia and Africa
– have been created to manage our international operations
more effectively. These regional and functional consolidations
within the Group aim to align business activities and improve
cross-functional support, in order to achieve the available
synergies of the advantageous scale of Etisalat’s operations.
Lastly, as you are aware, our operational footprint has been
impacted following the Supreme Court of India’s decision in
February 2012 to cancel all 122 of the 2008 spectrum licenses
granted to 8 operators, including the 15 licenses initially granted
to Swan Telecom (Etisalat DB). The Supreme Court decision
relates to events that occurred in 2007 and culminated in
January 2008 with the issuing of the 122 licenses, well before
Etisalat started looking at investing in one of the new licensees
in year 2008. Etisalat eventually invested in Swan Telecom in
December 2008. Etisalat DB is conscious of the impact of the
judgement on EDB’s customers, employees and vendors; as is
Etisalat in respect of its shareholders. We are currently fully
engaged along with Etisalat’s senior management to safeguard
the Corporation’s investments.
I am honoured to lead the Group into the next stage, and I look
forward to working with our teams and partners to build on the
remarkable success and achievements throughout the countries
in which we operate.
Respectfully yours,
Our associate operations, most notably Etihad Etisalat ‘Mobily’ in
the Kingdom of Saudi Arabia, also delivered healthy results. In
total, they contributed AED 1.2 billion to the Corporation’s net
profit before Federal Royalty.
Looking ahead, Etisalat has embarked on the execution phase of
its new ENGAGE strategy, comprising six strategic pillars:
• Enrich customer experience
• Nurture advanced technologies
• Govern decisively
• Achieve broadband leadership
• Grow with sustainable portfolio
• Excel in execution
Ahmad Abdulkarim Julfar
Group Chief Executive Officer
16
Operational Highlights 2011
167
135
Subscribers
31.9
FY’10
Revenue (AED b)
5.9
4.3
Etisalat’s global subscriber base (subsidiaries and associates) grew by 23% for the
year, reaching 167 million subscribers by year-end. Total UAE subscribers remained
stable at 10.3 million, while international operations drove subscriber growth, most
notably in Etisalat Misr in Egypt, which witnessed 40% growth.
FY’10
FY’11
Global Subscribers (m)
32.2
CAPEX
FY’10
CAPEX (AED b)
CAPEX decreased by 27% to AED 4.3 billion. Capex in UAE in 2011 was at a slower
phase compared to 2010 mainly due to the FTTH roll-out in 2010. CAPEX in
international operations also impacted by political unrest in Egypt as well as
uncertainties in India. Consolidated CAPEX represents 13.3% of consolidated revenues
in 2011 compared to 18.5% in 2010.
FY’11
Revenues
Impairment Charge Recognised in India
Consolidated revenues increased by 1% to AED 32.2 billion. In the UAE, revenue
growth was driven by the Internet and Data segments which combined grew by
20% to AED 8.0 billion. Despite overall UAE revenues decline by 3%, this was offset
by 17% growth in revenues from international operations. International operations
contributed 26% of consolidated revenues, mainly led by Etisalat Misr in Egypt and
Atlantique Telecom in West Africa.
On February 2, 2012 the Supreme Court of India canceled 122 2G licenses issued in 2008. Eight operators are impacted by the
ruling, and some reputable international operators are among the affected ones. Etisalat, which has partial ownership in Etisalat
DB, is among these operators. In accordance with International Financial Reporting Standards (IFRS), Etisalat Management decided
to recognize an impairment charge in 2011 consolidated financial statements amounting to an aggregate of AED 3,044 million
before Federal Royalty against the full carrying value of goodwill; amounting to AED 1,227 million; and the net assets including
licenses of its Indian operations. The net impact of this charge on our consolidated net profit after Federal Royalty amounts to
AED 1,020 million.
FY’11
Profit and Loss Summary
EBITDA
16.6
15.9
EBITDA decreased by 4% to AED 15.9 billion in 2011 mainly due to increase in selling,
marketing and transformation expenses.
EBITDA margin decreased by 2.6 pts to 49.3%. Despite 5.5 pts decline in the EBITDA
margin in UAE, this was partially offset by significant improvement in the EBITDA
contribution of international operations.
FY’10
EBITDA (AED b)
FY’11
7.6
74
5.8
FY’10
31,929
16,561
52%
7,631
24%
FY’11
32,242
15,882
49%
5,839
18%
YoY
+1%
-12%
-3pp
-23%
-6pp
Balance Sheet Summary
Net Profit and EPS
97
(AED m)
Revenue
EBITDA
EBITDA Margin
Net Profit
Net Profit Margin
Net Profit decreased by 24% to AED 5.8 billion mainly due to 4% decline in EBITDA as
well as negative impact of impairment charge recognized in India. “Normalized” Net
Profit, before the impairment charge, amounts to AED 6.9 billion representing a yearon-year decrease of 10%.
(AED m)
Cash & Cash Equivalents
Total Assets
Total Debt
Net Cash
Total Equity
FY’10
10,277
75,607
6,400
3,877
42,565
FY’11
9,972
72,892
6,696
3,276
41,704
EPS decreased to 74 fils/share of which 60 fils/share will be distributed as dividend to
our shareholders subject to the approval at the AGM.
FY’10
Net Profit (AED b)
EPS (fils)
17
FY’11
18
Operational Highlights 2011 continued
Cash flow Summary
(AED m)
Operating
Investing
Financing
FY’10
7,807
(4,853)
(4,372)
FY’11
7,481
(2,552)
(5,387)
Net change in cash
(1,418)
(459)
Reconciliation of Non-IFRS Financial Measurements
We believe that EBITDA is a measurement commonly used by companies, analysts and investors in the telecommunications industry,
which enhances the understanding of our cash generation ability and liquidity position, and assists in the evaluation of our capacity
to meet our financial obligations. We also use EBITDA as an internal measurement tool and, accordingly, we believe that the
presentation of EBITDA provides useful and relevant information to analysts and investors.
Our EBITDA definition includes revenue, staff costs, direct cost of sales, regulatory expenses, operating lease rentals, repairs and
maintenance, general financial expenses, and other operating expenses.
EBITDA is not a measure of financial performance under IFRS, and should not be construed as a substitute for net earnings (loss) as
a measure of performance or cash flow from operations as a measure of liquidity. The following table provides a reconciliation of
EBITDA, which is a non-IFRS financial measurement, to Operating Profit before Federal Royalty, which we believe is the most directly
comparable financial measurement calculated and presented in accordance with IFRS.
AED m
EBITDA
Depreciation & Amortization
Exchange gain/(loss)
Share of Associates and JVs results
Impairment
FY10
16,561
(2,985)
(192)
1,243
-
FY11
15,882
(3,388)
(216)
1,208
(3,044)
Operating Profit Before Federal Royalty
14,627
10,442
19
20
Management Review
Group Commercial Initiatives
Etisalat introduced the commercial rollout of a globally interoperable, open-loop,
mobile commerce ecosystem across its operations in 2011, and will continue
making this service suitable for emerging markets.
The fully interoperable open-loop service offering is the
first implementation of an affordable NFC service in the
world, the first GSMA compliant NFC service in Africa, and
the first fully interoperable NFC service in the Middle East.
It can be integrated with all national payment gateways
and global MNOs, and has 33 million acceptance locations
around the world.
Etisalat now enables customers to use their mobile phones
as a payment instrument - anytime and anywhere - without
geographical borders. The highly secure environment
is available at all merchant locations that are globally
supported by MasterCard, and through various local and
regional payment networks. The service is offered across all
interfaces including online, NFC, STK and secured IVR.
Etisalat Group signed a mutual agreement with Mobily in
2011, under the terms of which Etisalat will provide Mobily
with live TV channels with EPG and VoD pushed through
fibre optic cables, from existing content platforms in the
UAE across the border to Saudi Arabia. Leveraging on the
commercial success of IPTV services in the UAE (launched
under the brand name eLife), the same services can now
be offered to Etisalat companies or to other telecom
companies in the region, under a white label offering.
This will help place Etisalat at the forefront as a leading
and innovative group offering new, unique, and advanced
services in the region.
Etisalat UAE unveiled ePlus - a portal featuring rich content
and social media - during the Gitex Technology Week held
in Dubai. ePlus allows subscribers to make high quality video
and voice calls, leveraging VoIP technology in addition to
utilising social networking applications and e-commerce.
It supports the most popular social and instant messaging
platforms, synchronises mobile contacts with online friends,
and consolidates all contacts into one single screen, called
Radar View. ePlus also provides users with the latest music,
games and apps. Within the same intuitive interface,
customers can manage bill payments and check data usage.
The ePlus application also provides consumers with full
mobility through its PC and mobile synchronisation. The
service uses the NFC platform and is m-commerce enabled.
It currently works across the 3G, 4G and Wi-Fi networks
and supports the Android 2.2 platform, and will also
encompass other operating systems in future.
The Etisalat Group implemented several new offers last year,
based on Dynamic Discount System (DDS), which enables
operators to offer special pricing based on individual site
utilisation, thereby increasing network utilisation and
enhancing overall profitability. DDS initiatives have been
successfully launched at Moov in Togo, and are being tested
among other operators in Etisalat’s footprint.
In line with corporate strategy to create new value for
customers, Etisalat Group launched a new youth proposition
in 2011, enabling subscribers to benefit not merely from
special pricing, but also, to get special deals from their
preferred shops, restaurants, and brands. The first of this
breed was the Epiq Nation offer launched by Zantel in
Tanzania, with highly applauded results.
Etisalat continues to address the plight of women in
Sub-Saharan Africa, where approximately 500,000 pregnant
women die every year, almost 4 million babies died during
the first 28 days of life, and the risk of maternal death is
50 times higher than developed countries. As most women,
especially those in low income countries, continue to deliver
at home for a variety of reasons, it is vital to make home
deliveries safer by reducing the three traditional delays:
the decision to seek care, arrival at a health facility, and the
provision of adequate care.
Etisalat’s Mobile Baby programme is a complete suite of
services that enables birth attendants and midwives to
ensure safer pregnancies and deliveries by enabling them
to identify, communicate, and act on obstetric emergencies
- quickly and accurately. The educational and training
programmes are currently being rolled out by local NGOs
and government agencies. Feedback from attendants,
trainers and medical practitioners is also used proactively,
for ongoing application optimisation.
22
23
24
Management Review continued
Middle East - Etisalat UAE
Etisalat UAE has continued to introduce innovative services and initiatives across
the country, to streamline processes, to maximise efficiency, and to benefit
customers and employees alike.
Innovative services
The soft launch of the eLife TV service on Etisalat UAE’s new
IPTV 2.0 platform was completed in May 2011, and during the
course of the year, more than 30,000 new IPTV subscribers
were successfully added, and over 50,000 existing IPTV 1.5
customers successfully migrated to the platform. New services
and capabilities introduced on the platform include Live TV
Choice packages of 350+ channels, Catch-Up TV on 20+
channels, Video on Demand (VoD) with 500+ movie titles, and
customised experiences.
eLife TV is scheduled for two major service enhancements by
May 2012, which will enrich and further differentiate the service
from all others in the market. By this period, users will see key
eLife TV services, such as eLife OnDemand, Live TV, and CatchUp TV extended onto LG Smart and 3D/Smart TVs, as well as
other connected TVs, and mobile, tablet and pad devices.
Earlier in the year, Etisalat’s VoD service, eLife On-Demand, was
successfully demonstrated on an LG Smart TV. The significance
of this innovation is that customers who purchase an LG Smart
TV or LG 3D Smart TV in the UAE, and have eLife 2P double play
service accounts, can browse and rent any of the 500+ movies
without a TV set top box.
As a complementary service to eLife TV, Etisalat UAE launched
eLife OnWeb, an Over the Top (OTT) service in July 2011, allowing
users with different types of devices to access content that is
both unique and 100% on-demand. By November 2011, the
eLife OnWeb service was already available on four LG products,
and by the end of 2012, it will be made available on three
Android based tablets/pads, two Satellite Hybrid/IP HD receiver
STBs, a Google Android TV STB, two Android based mobile
phones, and on all iPhones.
Two major initiatives were undertaken in 2011 in the field of
NFC (Near Field Communications): the first, a pilot project
with Emirates NBD and Visa for tap and pay payments, and
the second, another pilot with MasterCard and Network
Internal to enable payment on NFC phones. Based on
successful results of these projects, Etisalat UAE is currently
working with both Visa and MasterCard to launch commercial
NFC services in the country.
25
Etisalat’s VoIP solution, ePlus, is an integrated Mobile Application
Client designed specifically to directly counter OTT players and
VoIP operators, while leveraging on the company’s strongest
assets and simultaneously converging products and VAS
services in unified interfaces. ePlus is also a unique interface to
the full portfolio of Etisalat services offerings, and will ensure
that customers receive an enhanced communication experience,
thereby driving retention and loyalty.
Further, ePlus’ 360 degree communications campaign is
expected to influence non-Etisalat customers to migrate
to Etisalat, and allow the company to capture new mobile
broadband subscribers. The application was highlighted during a
live demonstration at Gitex 2011.
First class network
Etisalat’s technical teams were busy throughout 2011,
implementing a range of network upgrades and enhancements to
improve the quality and customer experience of Etisalat’s services.
• Credit card payment facilities were installed in more than
70% of Etisalat Payment Machines (EPMs), raising the tally
from last year’s 20%. Residents can now deposit money in
their mWallet accounts, at all EPMs in the country, and in
Sharjah, residents can pay their water and electricity bills at
EPMs located in the West Coast.
• The transformation of the Etisalat network to an all-IP fibre
based infrastructure was concluded in 1.3 million tenancies,
including residential and business venues. Home Ready was
achieved for 0.9 million tenancies, and customer activations
of FTTH/GPON network for 0.5 million tenancies.
• The first phase of IPTV 2.0 development is complete, with
service testing and network verification conducted across
all IPTV 2.0 PoPs. The project will provide a fully integrated
SD & HD MPEG-4 converged IPTV platform for various
requirements on a turnkey basis.
• The FemtoCell network development is planned in phases to
improve indoor mobile network coverage issues, and thereby
enhancing revenues.
• A work force management system has been implemented
successfully for eLife, PSTN and Internet Broadband using GPRS
based PDAs. This ensures that Etisalat staff and contracted
technicians are able to procure field jobs quickly, and close
service requests for service delivery and faults at the earliest.
based management (LBM) and covers both wireless/mobile and
fixed line businesses. Distinct advantages proven during the year
include addressing business needs such as short-term network
CAPEX/OPEX optimisation, regionalisation of the company’s
business model, and revamping of management dashboards.
• A new Billing Improvement Programme is expected
to improve customer experiences with billing, and
simultaneously reduce revenue loss resulting from
inaccuracies and late bills.
Various special offers were launched during the holy month
of Ramadan to combat dropped usage and changed calling
times. Based on learning gained from Etisalat Pakistan, the
insightful offers saw extremely high levels of adoption, and
not only helped drive usage upwards, but also fostered positive
customer experiences.
• The Techno Centre established in Abu Dhabi became fully
functional in 2011, and produces regular reports on proactive
testing, recurring test and functional tests, to support the
marketing function.
Enhanced customer service
The launch of the SERVE programme is one of the first signs that
mark Etisalat UAE’s transformation from a telecommunications
company into a service-oriented company. The two-fold focus
of the programme is: what customers want, and how to serve
them better and faster.
The SERVE Team conducted 12 road shows in the first 2 months
of the programme, resulting in a 30% reduction of calls to
the call centre, which is directly attributed to first contact
resolution, or resolving the problem from the very first call.
During 2011, SERVE made a positive impact in several areas that
influence customer satisfaction, resulting in significant leaps
and the highest scores in the year’s TRIM Index-CSAT scores.
The main objective of the Complaints Management Program is
to improve overall process efficiency, and enhance the mindset
and behaviour of all departments towards handling customer
complaints. 2011 saw successful structuring and testing of a
root cause resolution process that minimises reoccurrences
of identified issues. Other achievements were a pilot for a
centralised complaint management process, and the definition
and development of a frontline empowerment process.
A new unit was set up under Channel Marketing to help
various teams make management decisions based on intrinsic
understanding of value distribution across the customer base, and
across operational geographies. Geo Marketing is based on location
Community involvement
Etisalat UAE supported, and contributed to more than 35
different initiatives in 2011, through sponsorships and donations
for sports, educational, health, community and charitable events
held across the country - in an ongoing mission to help enhance
all aspects of society.
The events, projects and recipients were vastly varied in size,
scope, structure and purpose, and included among others, the
Dubai World Cup, the Khalifa Fund, the UAE Special Olympics
Team, a countrywide Anti-Smoking Campaign, the 2011 National
Census, and Dubai’s Holy Quran Award.
In December 2011 - to mark the commemoration of the UAE’s
40th National Day - Etisalat established its own CSR foundation,
Ayaadi, with the prime objective of supporting local communities.
The focal point for a national-level social project of significant
objectives and expectations, Ayaadi aims to participate in
sustainable growth for the UAE by providing technology
solutions in education and human resources.
Further, the foundation aims to support health, environment
and community development, by offering technical support
and cooperating with ministries and others to launch joint
programmes with social dimensions. And finally, Ayaadi will
work closely with the Ministry of Education and non-profit
organisations to plan and execute various development projects
focussing on youth.
26
Middle East - Mobily (Saudi Arabia)
Middle East - Etisalat Misr (Egypt)
Mobily reinforced its leadership position in the Kingdom, with the launch of
4G (TDD-LTE) technology. Working in association with subsidiary and data
arm Bayanat Al Oula, Mobily LTE is expected to cover more than 32 cities and
governorates, representing 85% of populated areas.
Etisalat Misr has continued to be a pioneer and a leader in the Egyptian market,
since its launch in May 2007. As the first 3G operator in the country, Etisalat
Misr deploys the latest technologies to keep ahead of competition, and to
respond to constantly changing customer needs.
Bayanat Al Oula has also signed an agreement for the
construction of an advanced fibre optic network (FTTX) at a
cost of SAR 400 million. The agreement - which was signed with
four international companies - intends to roll out fibre networks
of 4,000 kilometres reaching 70,000 homes in Riyadh, Jeddah,
Dammam and Al Khobar in its first phase.
As a direct result of ceaselessly introducing secure, reliable and
robust products to the Saudi market, Mobily was selected by The
General Organisation for Social Insurance (GOSI) to help develop
the Wahat Ghurnatah business park. Among the services Mobily
will deliver are IPTV, Ethernet VPN (L2), IP VPN (L3), and Direct
Internet Access.
A new bio-sourced, eco-friendly SIM card was made available
to subscribers in 2011. The card is fully compliant with
telecommunications standards and is certified 100% recyclable
- two features that make it a first in the Gulf region.
The company is currently engaged in working on integrating
mobile and fixed networks to provide efficient traffic capacities
and to meet the requirements of future applications - allowing
users to watch TV content on mobile phones, laptops, tablets or
in their cars without any interruptions.
Recognising that data consumption will increase dramatically in
the immediate future and customers are increasingly demanding
high speed data access, Etisalat Misr became the second mobile
operator in the world to deploy IP/MPLS core, and implement
the latest packet core technologies including direct tunnelling
features. Concurrently, Etisalat Misr became the first mobile
operator across Africa and the Middle East to conduct an
end-to-end field test for HSPA+ 42 Mbps technology. Aimed at
providing customers with high speed 3G data connection, the
technology was commercially launched in many areas of the
country at the end of 2011.
A third launch was the DC-HSPA+ 42Mbps Wi-Fi Router in
partnership with NetComm Ltd, which allows millions of home
users across Saudi Arabia access fast broadband speeds, and
connectivity on multiple devices. Mobily’s HSPA+ network will
also create a transform the lives of Internet users in remote
areas by providing high-speed access to large volumes of data
and communication, without cable connections.
Mobily opened the largest all-female call centre in Saudi Arabia
in a bid to expand customer service facilities, minimise waiting
times and improve customer experience. The Jeddah centre is
equipped with the latest technologies, and manned by 347 Saudi
female staff.
The new ‘7ala National’ prepaid package targeted new and
existing Mobily customers with competitive rates for local calls.
Mobily ran an intense sales and promotional campaign during
the Hajj season, with dedicated outlets at the Kingdom’s air,
land and sea passages and miqat locations, and overseas, in
prominent Arab and Islamic countries.
Continuing the social role it plays in supporting various local
charities, Mobily auctioned 15 platinum mobile numbers and
raised SAR 6.7 million to benefit 10 healthcare charities in
Q1, 2011.
In an effort to boost innovation and stimulate creativity, the
company launched an App Developers Award, inviting ideas and
designs from young Saudi developers, in 11 different categories.
Responding to the directives of the National Telecom Regulatory
Authority of Egypt, Etisalat Misr began implementing a new
mobile numbering plan in October 2011. The transformation
from 7 digits to 8 digits was greatly facilitated by an easy-touse mobile application made available to most Misr subscribers.
The migration is expected to be completed by Q1, 2012.
In an innovate move, Etisalat Misr signed a unique agreement
with Facebook and became the first mobile operator in Egypt to
provide customers with mobile internet bundled with Facebook
applications. The Save More service provides unlimited data
usage to heavy social media users, at extremely affordable
monthly fees.
A new service was launched in 2011 to protect customer privacy
through call filtering. Using the service, Etisalat Misr customers
can now control and manage their incoming calls, by making
themselves unavailable to undesired calls while remaining
reachable to those they wish to connect with.
Etisalat Misr continues to deploy advanced, powerful, and
flexible technology platforms to manage various customer
loyalty programs. For instance, MORE offers high-value
customers several exclusive privileges and unique benefits
including a competitive point scheme with a wide variety of
gifts, a dedicated customer care number, red carpet treatment
at Etisalat stores, and exclusive affinity and discount deals at a
variety of lifestyle brands.
The loyalty system also manages a comprehensive and
end-to-end customer lifecycle, based on enrolment, segment,
channel and customisation. An inbuilt mechanism calculates
multiple points to provide customised treatments to customers.
In addition, a comprehensive gift catalogue enables customers
to choose from a wide range of gifts using various channels
such as IVR, retail outlets and online channels.
A key strategic objective of the HR department of Etisalat
Misr is to recognise and reward innovative ideas. A special
team has been dedicated to assess and evaluate original and
beneficial ideas that are aligned with strategic objectives,
and to incorporate them into the company’s business
activities. Winning ideas are rewarded with cash prizes, or
with membership to the company’s Innovation Club - with
privileges including special outings, free books, and discount
vouchers. Grand ideas that achieve specific business objectives
are rewarded handsomely, with a cup of recognition and a
substantial monetary award. Innovators also become members
of the implementation team that translate ideas into useful
products or services.
Good corporate citizenship has continued to be a strategic
objective for Etisalat Misr since its entry into the Egyptian
market, and this is exemplified through various initiatives across
the country.
Origin, the largest cause-based and water-related CSR initiative
in Egypt, aims to provide clean water to more than 100,000
Egyptian homes in a very short period. Further, Origin aims to
tackle local farmers’ irrigation problems with an educational and
practical conservation campaign run under the slogan, ‘Save
Water, Save Life’.
Since its launch in 2009, the award-winning programme has
succeeded in providing 3,000 water connections to 30,000
people, 13 water purifications stations to serve 80,000 people,
7 kidney dialysis purification units to increase the efficiency
of 77 kidney dialysis machines, 20 kidney dialysis machines to
help 3,800 patients every month, and 6,500 metres of irrigation
channels to serve 15,000 people. The campaign also urges
Egyptian society as a whole to take serious and practical steps
to overcome water scarcity in the country.
Etihad Etisalat (Mobily), KSA
27
28
Middle East - Etisalat Misr (Egypt) continued
In Q3 2011, Etisalat Misr launched its largest initiative, Give
Back, enabling all employees to contribute personally to the
wellbeing of society, by supporting charities of their choice
through the Etisalat Intranet portal. The programme enables
employees to render a wide range of social services such as
providing financial support to poor families, helping with the
treatment of desperate medical cases, funding micro projects,
paying off debts, giving interest-free loans, and providing pure
water connections through Etisalat’s Origin Initiative. In addition
to monetary donations of EGP 202,544 raised during the year
for various charitable causes, employees also assisted with a
food programme held during Ramadan.
The launch of Etisalat Masmou3 was marked with great
fanfare, and the special service for speech and sight challenged
consumers highlights the company’s vision to serve every
segment of the local community. The service’s special software
helps impaired customers use their mobile phones - quickly,
easily, and independently.
Etisalat Misr continues to be the official sponsor of Al Ahly
Club - the most popular sports club in Egypt with a fan base of
40 million - in the largest sports sponsorship deal in Egyptian
history. Harnessing the huge popularity of the club, the
company hopes to convert fans into customers during the three
years of the contractual period.
Middle East - Thuraya
The year 2011 brought a number of successes for Thuraya, including increased
market roll-out of the high-speed data solution Thuraya IP, steady growth of
handheld terminal sales, and higher penetration of vertical markets.
Despite mounting competition, the company also maintained
its impressive 65% market share in mobile satellite voice
penetration within coverage area, underlining growing
popularity in the MSS (maximum segment size) market.
A continued focus on vertical markets saw key hires of
personnel with in-depth industry experience, and the launch of
new programmes for partner management, pricing packages
and enhanced customer care, emphasising a determination to
provide world-class consumer experiences that combine quality,
reliability and affordability.
Thuraya IP - the world’s smallest and fastest satellite
broadband solution - reported an increase of 60% in subscriber
growth across diverse industries, including broadcast
media, government, NGOs and large energy enterprises. The
introduction of flexible pricing plans, Shareplan - a pricing plan
specifically designed for major consumers with multiple Thuraya
devices - and a successful marketing campaign promoting its
unique features, were key drivers in the successful uptake of
Thuraya IP.
Thuraya XT - the only satellite handheld device to offer full walk
and talk capabilities - gained popularity for its ease-of-use and
wide range of intuitive features such as the fastest data service,
GPS waypoint navigation and a glare-resistant display.
To further accelerate business growth, Thuraya focused its
efforts on reinvigorating commercial operations across the Asia
Pacific market. A specialised team was deployed to manage
operations from the Singapore hub, and this resulted in both,
greater market awareness and increased subscriber growth.
The company continues to invest in a strong CSR strategy,
supporting groups and individuals in various community social,
charitable and sporting activities.
Harnessing its strong relationship with the International
Telecommunications Union (ITU), the company provided
financial assistance to victims of the Japanese earthquake and
tsunami, earlier in the year. The company also provided handheld
phones to the Ugandan government, with a view to assist the
authorities in setting up a disaster warning system.
Most prominently, Thuraya partnered with Al Aan TV to raise
awareness of the long-drawn famine in Somalia by donating a
Thuraya IP solution, which enabled live streaming of TV stories
from areas of drought. Thuraya also made a contribution to
relief activities in the wake of the floods that devastated many
parts of Thailand, towards the end of the year.
With a new version planned for release in early 2012, the
Thuraya XT Dual - which will allow consumers to easily select
between satellite and GSM mode depending on their location
- Thuraya is set to build on its success as the world’s market
leader in satellite handhelds.
29
30
31
32
Africa - Atlantique Telecom (West Africa)
Product innovation was a key theme for Atlantique Telecom throughout 2011,
and across all six African markets.
The launch of the CRBT service attracted large new segments
of young customers with vast choices in personalised music
for mobile caller tones. BlackBerry solutions were successfully
introduced across all operations, with solutions for both postpaid and pre-paid customers, and rapid market penetration
was achieved with the offer of monthly, weekly, and daily tariff
plans. Additionally, a centralised group media campaign was
rolled-out in November.
Atlantique Telecom became the first operator in the region
to introduce tablets to consumers, with a diverse portfolio
including Huawei S7, iPad, Samsung Galaxy and BlackBerry
PlayBook.
Following the successful launch of the Moov passport in 2010
- which allowed customers to roam at special rates across
the footprint of West and Central Africa - new offers were
designed to address specific needs. Etisalat UAE and Mobily
Saudi Arabia were integrated into the scheme under Moov
Hadj Roaming, allowing customers to enjoy low flat rates while
travelling to Mecca.
The company continues to partner with key internet and social
networking players, to surf the wave of new consumer trends and
capture the loyalty of the digital generation. Moov has signed an
agreement with Google to allow Gmail users to send and receive
free SMS messages - a move that will make it the first telecom
group in the region to provide this innovative service.
The Customer Satisfaction Index established across all
operations continuously tracks both performance and
perception, thereby facilitating improvements in processes on a
regular basis. The Index aims to cultivate a customer relationship
based on ‘everyday confidence’, with a view to foster brand
loyalty, develop values, and optimise services. In addition, a
customer satisfaction survey conducted in almost all markets
during the year provides various tools to improve performance
and profitability and enhance customer satisfaction.
Continuous improvements and best practices are put in place at
Atlantique Telecom Group level and then cascaded through to all
countries to help improve customer service delivery. Ivory Coast,
Benin and Togo are already engaged in this process.
Atlantique Telecom strengthened its CSR initiatives in 2011,
building on the achievements of previous years.
In Benin, the company donated equipment for a medical
centre, contributed to the Disaster Flood Relief, sponsored the
Christmas tree of SOS Children’s Village, and conducted a blood
donation drive in Abomey Calavi. In Cote d’Ivoire, the company
donated food and non-food items in Bouake and Daloa, and ran
free vaccination campaigns against meningitis in Bouake, Daloa,
San Pedro, Korhogo, Bouafle and Toumodi.
In Gabon, Moov partnered with the Directorate General
of Road Safety to establish Village School Bambino. In the
Central African Republic (CAR), food donations were made
on International Women’ Day and during the holy month of
Ramadan. And in Togo, several initiatives are underway to
educate children from rural areas.
Africa - Etisalat Nigeria
Etisalat Nigeria has been creating ripples in the country’s fiercely competitive
market since inception - with innovative products and services, strong branding,
and popular community and charitable initiatives.
In September, the company launched its high speed broadband
internet service, Easyblaze, to customers in Lagos, Abuja, Port
Harcourt, Ibadan, Kano, Kaduna, Zaria, Warri, Enugu, Aba,
Awka, Nnewi, Onitsha and Benin. The high speed packet access
(HSPA+ 3.75G technology) offers speeds of up to 42Mbps and
allows subscribers to achieve quicker internet access, faster file
downloads, video calling and streaming, and related activities.
Within a month of its launch, Easyblaze was ranked the fastest
internet connection in Nigeria.
Following on the heels of Easyblaze, the launch of Gaga
further reinforced Etisalat Nigeria’s position as the industry
leader in innovation. The Gaga Android smartphone, an
Etisalat customised 3G-enabled device, operates on Android
2.2 and boasts stunning features for download, acceleration,
photography, viewing and functionality. A comprehensive
marketing communications programmed helped achieve all
targeted objectives, and sustenance plans are underway to
leverage the product further.
Etisalat Nigeria’s new DotMe - an SMS based bulletin board
service which allows customers to share information and stay
connected while on the go - was first for the country. The
introduction of this service has increased ‘talkability’ among
targeted audiences, and the company has emerged as the
undisputed network of choice for young customers.
The popular Easycliq Easy was reloaded with two new features
in 2011 - Cliq for the Week and Cliq for the Day - offering
subscribers incomparable benefits and superior experiences.
The new additions succeeded in showcasing strong brand
commitment to existing subscribers who constantly desire new
approaches to self-expression, and to young subscribers with a
high propensity to consume data. Extensive media coverage and
subsequent results of the reloaded services have led to growth
in the lucrative youth segment.
Elite World, the high-value proposition was further enhanced
during the year, with both post-paid and pre-paid versions to
suit specific target markets.
The company continues to reward and encourage its valued
distribution partners with a scheme that celebrates high
sales across all product lines, and the second edition of the
performance awards held in 2011 underscored their critical,
importance in achieving strategic goals, and overall success.
33
Etisalat Nigeria was prompt and proactive in responding to
the call made by Nigerian Communications Company (NCC)
- the regulatory body for telecommunication operators – in
introducing a universal practice of SIM registration in the country,
concentrated efforts were made to adhere to the September
2011 deadline, and various measure were taken to ensure full
compliance from all existing customers. Acting to overcome the
threat of disconnection, unique promotional activity designed
to encourage subscribers included 30% bonus credit for all
recharges. This promotion was supported by a PR campaign
explaining the mechanics and benefits of registration promo,
and a concurrent educational campaign for subscribers, dealers,
staff and other stakeholders.
The company continued its mission to provide eco-friendly and
sustainable products and services, and in 2011, partnered with
Oberthur to introduce innovative climate-protecting SIM packs.
The new ecoSIMs card reduces the amount of plastic involved in
production by half. Its environmental footprint is also half that
of the classic SIM card, thereby reducing greenhouse emissions
from 16 grams of carbon dioxide to 8 grams, per card. This new
product is delivered to customers in recycled paper products
using vegetable-based inks, and has thus reduced environmental
impact across all stages - from production to client delivery.
The 0809ja concept - the communication launch pad for Etisalat
Nigeria’s market entry three years ago - was leveraged during
the year to celebrate the uniqueness of Nigerian consumers, and
their quest to be the best. As a result of sustained efforts, the
0809ja concept has not only increased brand awareness, but
also translated into a popular culture.
The company launched a Benin Experience Centre in 2011, to
reinforce the Etisalat values of customer-centricity, to increase
retail footprint, and to bring products and services closer to
both potential and existing subscribers. The initial objective of
increasing retail footprint was achieved very quickly, and the
Benin Experience Centre is positioned as an exemplary showcase
of customer-friendliness in the country.
The Etisalat CSR Centre – a learning centre developed in
partnership with Lagos Business School of the Pan African
University – continues to disseminate CSR knowledge, through
research, seminars and conferences. The Centre held three
workshops in 2011, in addition to training the school’s MBA
students, on sound CSR practices.
34
Africa - Etisalat Nigeria continued
The company’s inaugural CSR report was published in June
2011, outlining strategies, activities, challenges, programmes
and successes. This was lauded by stakeholders, and was
helped reinforce Etisalat Nigeria’s identity as a caring and
responsible company.
A large number of new initiatives were launched during the year,
as were revisions and enhancements to existing programmes:
• Etisalat Nigeria partnered with the Lagos state government
to bring about sustainable change and development in public
primary and secondary schools though the Adopt-A-School
campaign. Under its private sector sponsorship initiative,
the company has adopted Akande Dahunsi Memorial High
School, Osborne Road Ikoyi, Edward Blyden Primary School,
Okesuna Lagos Island and Rabiatu Thompson Primary School
Surulere. This ‘life-long adoption’ of the schools involves
achieving sustainability through continuous support for
infrastructure development, teacher training, leadership and
management, and financial support for students.
• Reinforcing the brand’s strong youth focus, Etisalat Nigeria
has partnered with NYSC - an umbrella organisation for
young graduates in Nigeria - to use their Career Days and
Camp Fire Nights to guide and encourage youth.
• Meanwhile, the Etisalat Career Day aims to provide
opportunities for Nigeria’s future entrepreneurs, by offering
exclusive mentorship platforms, and positioning youth to
embrace the entrepreneurial challenges of the future. The
year’s efforts were acknowledged by glowing testimonials
from NYSC’s Zonal Inspector and Corporation Members.
• The company’s Career Counselling Programme is a unique
platform for Etisalat staff to make a motivational impact
on students in host communities, by delivering talks and
offering expert support. Run in association with the Lagos
Empowerment and Resource Centre (LEARN), the Employee
Volunteering Scheme taps into the unique skill-sets of staff
members to facilitate the development of Nigerian youth.
More than 1,500 secondary school students were addressed
during the course of the year, and other initiatives are
underway to encourage staff involvement in the community.
• The Etisalat Merit Awards Scheme offers Nigerian university
students the opportunity to secure grants towards the
completion of their studies in electrical and electronics
engineering, computer science and management courses.
Based on academic performance and indigenousness, the
best performing students are often offered opportunities
to join the company upon graduation. By the close of 2011,
more than 600 students had benefitted from this scheme.
• The Etisalat Teacher Training Programme is designed to train
teachers in primary and secondary schools across the six
geo-political zones of Nigeria, and provide them with a firmer
grasp of their core subject areas, while equipping them with
tested methods of imparting this knowledge. This enabling
programme was launched in 2011, with the English language,
and teachers are currently being re-trained by the British
Council, and encouraged to become ‘Cambridge-accredited’
by attending exams at the end of the course.
• The company formally entered into a partnership with FC
Barcelona earlier in the year. Among other initiatives, a
promotion running between November 2011 and March 2010
will reward customers with the opportunity to watch an FCB
match in Spain.
• The Fight Malaria Initiative was implemented through two
vehicles during the year: a radio drama series titled The Will
to Win, and the distribution of insecticide-treated nets to
secondary schools in North Nigeria. Other efforts include
engaging local communities and state government ministries
of health and education in battling malaria, and at the close
of 2011, Etisalat Nigeria had helped prevent the incidence for
over 10,000 Nigerians.
Africa - Canar (Sudan)
Canar’s two-fold strategy of retention and penetration was
deployed throughout the year.
The July launch of WiMAX services was targeted at corporate
clients, both in terms of internet- eased lines, and point-to-point
connectivity. Canar also created 1-500 customer service
short numbers for enquires, and technical complaints from
corporate clients. A regional sales campaign was introduced to
corporate customers in Port Sudan for WiMAX services, while
door-to-door campaigns were conducted for broadband and
fixed lines in Khartoum households, and for ADSL services for
SMEs. A new Wi-Fi service was launched to target people on the
move, especially in parks, recreational areas, and universities.
Two of the year’s most successful promotions were 1X Retention
and Voice Retention. New POS channels for e-vouchers and
mobile banking were introduced at Al Salam Bank, and two new
distributors appointed for scratch sales in the Khartoum area.
Canar subsequently increased penetration of the SME and Large
Enterprise segments, with the introduction of a new channel
partner on a co-marketing model. The restructuring of the
in-door Business Centre (BC) sales teams also contributed to
increased sales. And finally, a telesales team was deployed at the
call centre, specifically to address the SME segment.
The company expanded its CSR portfolio with several community
initiatives and sponsorships - awards for the top ten students of
Sudanese High School Certificate and prizes for the first Festival
of Excellence; sponsorship of Sudan’s Internet Society Week
and Website Competition, the Al Anees Centre for Speech and
Language Services, and Kassala State Tourism Festival.
Employee engagement was strengthened with the Fikra Scheme,
an initiative that encourages ideas and decision making.
All launches and promotions were based on an extensive
market segmentation research undertaken by Canar’s Business
Intelligence (BI) and Research units. Targeting residents of
Greater Khartoum, the project involved personal interviews
for 3,000 individuals, and the process helped identify size,
expenditure and effective channels for relevant segments.
• On an entertaining note, Etisalat became the principal
sponsor of Nigerian Idol, the domestic version of the most
successful reality show in the world.
Sudan
35
36
Africa - Zantel (Tanzania)
Zantel has continued to focus on customer retention and loyalty building
programmes across Tanzania, and the July 2011 launch of Epiq Nation underlines
a strong commitment to the country.
Designed as a revolutionary product for youth, the bundle offers
voice, data, SMS, VAS and various lifestyle offers in a single
combined package. The core value proposition of various free
services made available for a daily fee of Tsh 500 was widely
perceived as an ‘original’ initiative. Outside the bundle, both
on-net and off-net calls are offered at reduced rates, and Epiq
Nation customers also enjoy discounts from lifestyle brands.
A detailed customer satisfaction survey was conducted with 850
customers in Zanzibar and Pemba, to gather feedback on their
Zantel experiences with network, data and voucher distribution.
Results show that customers feel recognised, and are satisfied
with the products and services they use. Leading customers
were rewarded with high-end handsets and free modems.
Internally, high performing employees were rewarded with
promotions, certificates and salary increments.
the programme will deploy mobile technology to support frontline health practitioners in providing counselling, preventive
care, and treatment to women and children. Etisalat’s role
is to provide connectivity, handsets, and technology to the
programme. The software-enabled handsets will allow health
workers to structure interactions with children, maintain patient
records, and offer extended care. Midwives can use it to identify
obstetric emergencies quickly and accurately, and caregivers can
use it to arrange transportation to the nearest health facility.
The first Zantel Day held on 15 November brought together all
members of staff including those of EXCO, and showcased the
rich diversity and strong team spirit of the organisation. Zantel’s
core values of excellence, openness, reliability and commitment
were reinforced through various games and group activities.
The Etisalat Group partnered with Qualcomm and D-tree
International to launch M-Health, a CSR initiative designed to
help fight malnutrition in children, and secure safe deliveries for
women across Tanzania. Working closely with the government,
Zantel - Tanzania
37
38
39
40
Asia - Etisalat Lanka
Asia - Etisalat Afghanistan
Etisalat Afghanistan continues to reiterate its long-term commitment to the
country, both as an investor and an enabler. This was exemplified in 2011
with technological upgrades and product roll-outs designed to meet the changing
and growing needs of the market.
Talk for Free - an on-net bundle promotion with affordable
long calls - brought in incremental revenue within a month of
its launch in June. Overall on-net revenues showed impressive
month-to-month growth due to a subsequent increase
in Etisalat Afghanistan’s market share, leading to sizeable
incremental revenues by year end. Furthermore, Talk for Free has
successfully captured the market limelight from competition.
A revamp of the Josh brand in August successfully engaged
young Afghan subscribers, by enabling them to call, text, and
browse more frequently – at attractive rates. As a result,
Etisalat Afghanistan managed to triple the number of activations
on Josh, in mere months.
As in the past, Etisalat Afghanistan engaged in active
promotions during the Hajj season, reinforcing the existing
brand perception of ‘an international company and trusted
brand with Islamic roots.’ The company realised an incremental
IDD revenue growth of over 300%, and roaming revenue growth
of more than 100% during the period of the promotions.
The Etisalat Afghanistan Rewards Program is designed to
provide benefits to loyal subscribers, though accumulation of
points based on usage, tenure, and subscription to multiple
services, and has enrolled more than 70,000 customers since its
launch in July. In a parallel program, ‘Win Back Offer’, more than
100,000 dormant and churn customers were rewarded for their
recharges, with discounted on-net and off-net rates - resulting
in a significant increase of both recharge and usage revenues.
On the CSR front, 2011 saw the Afghan Cricket Team
participating in the T-20 World Cup for the first time, under
Etisalat Afghanistan’s three year sponsorship of the Afghan
Cricket Board (ACB).
Etisalat Lanka has continued to keep its promise of being the first to offer
exciting new products and services in the Sri Lankan marketplace, with an array
of launches in 2011.
• In a country dominated by multiple-SIM usage, Easy Loan has
been very successful in persuading customers to continue
using the Etisalat SIM card even when their balance has run
out. The product provides a loan worth Rs. 20 in advance
credit for a nominal fee of Rs. 3.
• Pay for Me allows customers with no balance to request the
cost of the call to be passed on to the receiving party.
• The Call Me service sends a message to customers whose
phones are turned off and advises them off all calls missed
during the period. This service, a first for the country, is
a great convenience for customers, and has helped drive
revenues upwards.
• Refresh Cards combine airtime and data, and act as an
attractive bundle offer to encourage data-savvy customers
to the Etisalat network.
• The 1-to-1 Chat product offers unlimited chats between two
numbers for a daily fee. This popular service was suggested
and developed by an Etisalat employee.
• Etisalat Lanka remains the only operator on the country
to provide commercial High Speed Packet Access (HSPA+)
services, with better data speed than all local competitors.
Pre-paid services are the cornerstone of various services
provided by Etisalat Lanka, and the company expects to boost
its market share in the segment by capitalising on established
strengths. Although post-paid services was a key weakness
before acquisition, the balance has now tilted in favour of the
company, and the 100,000 active subscriber milestone was
achieved midway through 2011.
High ARPU (average revenue per user) post-paid customers
remain a key growth segment, and the launch of HSPA + mobile
broadband services is expected to boost their numbers. The
introduction of the Huawei range of tablets and android devices
has also helped create an upward trend for ARPU in both preand post- paid segments.
Etisalat Lanka is part of the Etisalat Group’s roaming agreement
setup initiatives with other global telecom companies as well
as the initiative for a common roaming rate within the Group.
The Saudi Mobily - Etisalat Lanka special package was a new
roaming initiative introduced in 2011, to foster customer
adoption and loyalty. It is expected to encourage the large
number of Sri Lankans employed in Saudi Arabia to migrate to
Mobily or use it more frequently, even as their families in Sri
Lanka will continue to use Etisalat.
The company ranks social media very high in customer
engagement activities, and its Facebook page - which crossed
50,000 fans in August - provides customers with valuable
forums like queries, answers, suggestions and recommendations.
The Etisalat Lanka Appzone allows entrepreneurs, students and
interested parties to develop applications on Etisalat’s platform,
and offer them to subscribers. Based on a revenue sharing
model, this project was conceived and developed by the Value
Added Services team.
Appzone was applauded at a global level when it was adjudged
the winner in the M-Infrastructure category at the South Asian
mBillionth Awards in 2011.
On the customer care front, initiatives launched during the
year included the creation of an Elite Team in a bid to respond
directly and promptly to high net worth individuals. Separately,
a monthly research programme, Brand Track, aims to understand
consumer behaviour, trends, and satisfaction levels. And finally,
a Customer Value Management project to enable behavioural
segmentation of customers is also underway.
The largest CSR initiative undertaken by the company in 2011
was the Sonduru-Diriya project, to recycle marketing waste.
Etisalat Lanka has set up self-employment projects in rural
villages, empowering local women to use recycled materials to
produce environment-friendly grocery bags.
Although the company was the fourth operator in the country to
launch 3G services, it has been extremely successful in acquiring
new customers with fast, safe and meaningful differentiation.
41
42
Asia - Pakistan Telecommunications Company
Limited (PTCL)
Pakistan Telecommunications Company Limited (PTCL) achieved the unique
distinction of becoming the first operator in the world to launch speeds of
up to 50 Mbps using the VDSL2 bonding technology.
The company’s investment in UltraNet - including broadband
network expansion and instant availability - was instrumental
in making Pakistan one the fastest growing countries for
broadband growth: Pakistan was ranked fourth in the world in a
2011 report published by Point Topic Limited.
The year saw many significant launches including 3G EVO WiFi
Cloud - a wireless broadband device that connects multiple WiFi devices simultaneously, 3G EVO Tab - a 7 inch touch screen
tablet, with built-in wireless capability, and video phone on
landline - for corporate and residential customers who wish to
have real-time video conversations.
The vast infrastructure of EVO wireless broadband with over
1,000 sites across the country, ensures wide EVDO Rev–B
enabled coverage, making PTCL the first operator in the world to
offer this technology on commercial basis.
PTCL EVO was subsequently ranked the most innovative service
in the country, and won the Consumer’s Choice Award 2010
from the Consumers’ Association of Pakistan, in the category of
Best Wireless Broadband. PTCL was also among one of only six
operators in the world nominated for the Telecom Management
Forum (TMF) Operational Excellence Award 2010, in the category
of Network Operation Centre (NOC) Platform
During the year, the company commissioned a 14,000 kilometre
I-ME-WE submarine cable system - which extends from Asia to
Europe and terminates in France - to provide additional capacity
to already operational SEA-ME-WE3 and SEA-ME-WE 4.
A Next Generation Switching Network (NGN) using MultiService Access Gateways (MSAGs) is under completion, and
the metro network is being upgraded with Carrier Ethernet
Technology, with IP based capacity metro nodes added to the
broadband core infrastructure.
PTCL - Pakistan
43
An innovative customer retention programme, Win Back, helped
synchronise the functioning of various departments to create an
improved customer experience, while a Customer Satisfaction
Survey helped understand public perception about the brand
and its services. Results of the survey were used to develop the
Customer First initiative, focusing on staff training in customer
relationship management.
The company’s CSR activities covered a gamut of areas and
arenas in 2011, chief of which was assistance to victims in floodaffected areas in the form of medical aid and food staples.
PTCL donated Rs. 5 million to the Punjab Government’s Fund
for Flood Victims, towards rehabilitation of people displaced
due to the catastrophic floods that inundated millions of acres
of agriculture land. Additional donations of Rs 3.9 million were
made by PTCL’s regional offices to various local agencies in
providing direct assistance to the residents of affected areas.
PTCL also made a donation of Rs 10 million to Danish School, a
project of the Government of Punjab, to provide free education
to children in under-developed areas.
The implementation of projects under the scope of the Universal
Services Fund (USF) made good progress during the year. Three
projects for the provision of basic telephony services in the rural
areas of Dadu, Pishin and Larkana have been completed, while
six broadband projects for underserved areas are in progress.
Almost 2,000 kilometres of optical fibre cable have been laid in
Balochistan province.
PTCL was awarded the 8th Environment Excellence Award by the
National Forum of Environment and Health, and the company
also received the President’s Award for Excellence in PR and
Corporate Communications.
Ufone - working in collaboration with parent company Pakistan
Telecommunications Company Limited (PTCL) - launched the
first Dual Mode GSM and CDMA converged technology handset
in Pakistan. This handset utilises Ufone’s GSM network and
PTCL’s EVDO data network to offer affordability and mobility to
Ufone customers in a single bundle; the device is competitively
priced and offered with free Mobile TV trials. Besides addressing
the needs of a niche market, it is expected to indicate the future
potential of 3G technology in the country.
Ufone launched a highly successful lifestyle-based customer
proposition for the female segment in 2011. Based on customer
insights, the unique value proposition was designed to offer
core telecom products backed by a strong line-up of lifestyle
partnerships with leading local apparel, shoe and beauty outlets.
Further, services and content geared towards women were
packaged together to increase both relevance and utility value
for female customers.
The launch of this tightly positioned offer provided a
breakthrough into the segment, with well over half a million
subscribers. This has helped Ufone in preserving average revenue
per user (ARPU) while attracting new subscribers from a higher
spending segment. The sharp increase in sales at partner outlets
has also interested more brands in partnering with Ufone.
Ufone capitalised on the increase in IDD traffic from Pakistan
to Saudi Arabia during the Hajj season, by offering extra value
to customers combining on-net advantages with IDD calls. The
campaign resulted in a 100% growth over the same season
last year, and helped attract a significant number of high-value
customers from the competition during this short period.
Ufone collaborated with Etisalat Afghanistan in 2011, to target
the large number of Afghan immigrants resident in Pakistan.
The attractive IDD offer caused a paradigm shift and resulted
in great success for both companies with increased share in
both traffic and subscribers: while Ufone witnessed close to a
150% jump in monthly outgoing revenues, Etisalat Afghanistan
achieved an increase of over 100%.
Ufone has been prominent in implementing CSR initiatives in
health, greening, and education for the underprivileged. The
company undertook a complete revamping of the Children’s
Ward and Children’s OPD of the Federal Government Services
Hospital. Partnering with Plan Pakistan, Ufone is engaged in
building a Thalassemia centre for patients in rural Punjab, and a
free dialysis unit at The Kidney Centre in Karachi.
Ufone plays an active role in The Citizens Foundation’s Rahbar a mentorship aimed at development of youth as responsible and
productive individuals, and in AIESEC’s initiatives to promote
environmental sustainability in middle schools across Lahore.
Ufone has maintained its position as one of the most popular
brands in Pakistan, by reiterating its promise of ‘spreading smiles
on the faces of all stakeholders’. This was acknowledged by the
Pakistan Advertisers’ Society (PAS) when it awarded Ufone for
‘Best Telecommunications Brand in Pakistan’, and by the Global
Telecoms Business Innovation Awards which conferred Ufone
with its ‘Customer Services Innovation Award’.
Ufone continues to emphasise customer micro-segmentation,
and works closely with the Etisalat Group’s marketing team to
enhance customer lifetime value. The targeted campaigns and
actions are aimed at enhancing monthly revenue by at least
5% in 2012.
ufone - Pakistan
44
Asia - PT XL Axiata
XL continued to maintain its industry position as the market leader in vision,
strategy, and execution, throughout 2011.
The year saw the launch of First Time Right (FTR), a group of
initiatives intended to create superior customer experiences with
‘moment of truth’ attributes. The initiatives led by Customer
Service and run by cross-functional teams aim to develop realistic
solutions based on customer feedback and complaint handling.
The launch of Reverse Ringback Tone, with its choice of ring
back tones, saw more than 1 million customers subscribe to
the service in the first six months. The successful rebranding
of XLGo! to GoKlik was marked by community-engaging
services such as message boards and serial stories, and the site
surpassed 5 million users in a single week, with a 50% return
rate. Cloud-based application Blaast which was launched in
December 2010 garnered great steam in 2011, and saw users
provided with instant access to localised content including news
and games.
Human Resources continued to strengthen XL’s transformation
strategy. The Xtra Learning initiative is designed to transfer
knowledge from top management to employees across several
platforms including training, apprenticeships, workshops and
seminar. A unique employee programme was launched to foster
Mobile Data Service thinking and activity across the company.
MDS Learning sees all employees actively engage in providing
inputs and ideas to Marketing and Product Development,
and the first phase of the programme concluded at the end
of the year, with 50% enrolment. The Fight Club Program
involves a group of employees called ‘Fighters’ who internalise
and symbolise a ‘fighting spirit’ towards achieving customer
satisfaction, by incorporating the first-time-right principle in
their everyday activities.
On the CSR front, XL has made great progress with its two
integrated programmes, Komputer Untuk Sekolah – KUS
(Computers for Village Schools) and Internet Sehat (Healthy
Internet). The five year KUS programme addresses the needs
of local schools with donations of computers, computer
training for teachers, free internet access, and an introduction
to Internet Sehat - a guide to using the internet wisely. KUS
reached over 30,000 students and 2,400 teachers in 2011,
bringing the count up to 187 schools throughout Indonesia, in
the three years since its launch.
Persembahan XL Bagi Negeri is a unique SMS donation
programme designed to raise funds for charity through
instant messaging. XL has collaborated with various local and
international organisations on this project, including UNICEF,
WWF, World Vision Indonesia, Yayasan Cinta Anak Bangsa, Pundi
Amal SCTV, Ikatan Dokter Indonesia, ICT Watch, Yayasan Wakaf
Centre, Yayasan Peradah, Dompet Dhuafa, Koin Sastra and
Yayasan Thalassemia.
Apart from ongoing efforts to ensure environment protection
and long term sustainability, XL has built a reputation for
prompt action in responding to natural disasters and alleviating
the loss and suffering of affected communities.
Key contributions during the year - particularly for the volcanic
disaster in Yogyakarta - included the provision of logistics
for emergency responses, telecommunication facilities, SMS
donations, the Merapi Greening Programme, and renovation and
assistance at affected schools.
XL continues to sponsor the Indonesia Berprestasi (IB) Award
to appreciate Indonesian citizens and institutions who make
a significant contribution to the environment and society, in
their respective fields of work. The 2011 edition was awarded to
three citizens and one community in the categories of science
and technology, social community, entrepreneurship, and art
and culture.
PT XL - Axiata
45
46
Network - Data
Africa
Middle East
Asia
Atlantique Telecom, Moov - West Africa
moov.com
Operational in 6 countries
Licence type
Mobile
Etisalat ownership
100%
Population
61 million
Penetration rate
64% average across all countries
Number of operators
Mobile 2-5 per country
Network coverage, population
60%
Etisalat, UAE
etisalat.ae
Licence type
Etisalat ownership
Population
Penetration rate
Etisalat, Afghanistan
etisalat.af
Licence type
Etisalat ownership
Population
Penetration rate
Number of operators
EMTS – Etisalat Nigeria
etisalat.com.ng
Licence type
Etisalat ownership
Population
Penetration rate
Number of operators
Etisalat Misr - Egypt
etisalat.com.eg
Licence type
Etisalat ownership
Population
Penetration rate
Number of operators
Canar, Sudan
canar.sd
Licence type
Etisalat ownership
Population
Penetration rate
Number of operators
Zantel, Tanzania
zantel.com
Licence type
Etisalat ownership
Population
Penetration rate
Number of operators
47
Mobile
40%
155 million
62%
Mobile, 5
74%
Mobile and Internet
66%
82 million
116%
Mobile, 3
99%
Fixed
89%
45 million
Fixed 1%
Fixed, 2
32%
Number of operators
Thuraya
thuraya.com
Licence type
Etisalat ownership
Population
Number of operators
Network coverage, geographical
Mobile, Fixed and Internet
100%
5 million
Mobile 242%
Fixed 38%
Internet 70%
2
100%
Satellite telecommunication
28%
Satellite, 4
140 countries
Etihad Etisalat (Mobily) – Saudi Arabia
mobily.com.sa
Licence type
Mobile and Internet
Etisalat ownership
28%
Population
26 million
Penetration rate
220%
Number of operators
Mobile, 3
99%
PTCL - Pakistan
ptcl.com.pk
Licence type
Etisalat ownership
Population
Penetration rate
Mobile
100%
30 million
57%
Mobile, 4
73%
Mobile, Fixed, Internet
23%
187 million
Fixed 3%
Mobile 65%
Mobile, 5
Fixed, 11
85%
Etisalat Lanka – Sri Lanka
etisalat.lk
Licence type
Etisalat ownership
Population
Penetration rate
Number of operators
Mobile
100%
21 million
99%
Mobile, 5
73%
PT XL Axiata Tbk – Indonesia
xl.co.id
Licence type
Etisalat ownership
Population
Penetration rate
Number of operators
Mobile
13%
246 million
98%
Mobile, 11
92%
Number of operators
Mobile and Fixed
65%
43 million
Mobile 57%
Fixed Line 0.4%
Mobile, 6
Fixed, 2
42%
48
49
50
Etisalat Services Holding - Ebtikar Card Systems
Working in partnership with international firms, Ebtikar
developed a series of SIM based solutions during the year 2011:
e-Registration, e-Activation on Demand, and Dynamic Number
Allocation Systems.
Categorised under pre-issuance and post-issuance, the
products successfully passed a pilot stage of testing at Etisalat
Afghanistan, spurring Ebtikar to launch similar SIM based
services for the rest of the Group companies. The products are
expected to result in significant and effective cost savings.
In line with the strategy to be a leading SIM solutions provider,
Ebtikar also launched various SIM solutions for its customers.
These solutions foster huge cost savings for users, and better
management of their network and logistics for the company.
Ebtikar introduced the Oracle Manufacturing System and
the ABC system for better management of its process and
resources. Oracle Manufacturing provides end-to-end customer
orders and accurate information for quick and effective
decision, and ensures timely delivery of customer products.
The ABC system of costing provides complete information of
all overheads used in production, which enables checking of
all costs charged to the customer, and ascertaining customer
profitability on every order.
The year marked a milestone for achieving enhanced
customer satisfaction. Reflecting various steps initiated by
the management, product quality improved considerably
and customer complaints decreased by half in comparison to
previous years. Ebtikar also satisfied customers throughout the
year with 100% on-time delivery of products and services.
Conscious of its environmental footprint, the company’s new
launches are designed as green or eco-friendly products. The
LiM SIM card is half the size of a standard SIM card, and uses
half the amount of plastic. Carbon dioxide emissions generated
in manufacturing is also lowered from 16 to 8 grams for every
LiM SIM card. Further, the smaller size means a corresponding
reduction in transportation costs and overall waste.
The company is on its way for EFQM certification. The European
Foundation for Quality Management Excellence Model is a
framework and method that will help Ebtikar achieve business
success by identifying their path to excellence, understand
gaps and identifying potential solutions for bridging them, and
developing an approach to implement bridging solutions.
Meanwhile, Ebtikar’s paper scratch cards are made of 100%
paper. The company is proactively engaged in educating
customers about the many benefits of paper cards.
Concurrently, Ebtikar is also in the process of being certified by
SAS. The Security Accreditation Scheme will enable Ebtikar to
benchmark itself internationally against global competitors.
Etisalat Services Holding - Emirates Data Clearing
House (EDCH)
As the first data clearing house in the Middle East, Emirates Data
Clearing House (EDCH) continues to provide comprehensive
services for financial clearing, settlement and reconciliation.
EDCH launched three new services in 2011 to address industry
demands, and the specific needs of various mobile operators.
• The RAEX-IR21 (Roaming Agreements Exchange –
International Roaming) service maintains client operators’
IR.21 details, and generates documents in RAEX format,
thereby reducing administrative time and efforts.
The company’s mobile operator clients in Oman, Saudi Arabia,
Bahrain, Kuwait, Iraq, Jordan, and Sudan have subscribed to
Optiprizer, to enhance their roaming business. This business
intelligence solution provides valuable insights into both
wholesale and retail roaming - with real-time performance
monitoring of bilateral agreements, KPIs, traffic steering policies
and pricing policies. While this undoubtedly helps operators
make informed decisions, it also fosters better customer
retention and higher customer acquisition.
• The EID Exchange (Electronic Invoice Data) service provides
financial clearing houses with an automated means of
exchanging invoice data based on the GSMA standard, and
ensures timely and accurate monthly completion of the
clearing process.
EDCH conducted its 12th Annual UGM in Dubai, UAE, from
18 to 19 April, 2011. The event was attended by more than 70
delegates representing clients and partners from 30 countries
across Asia, Africa and the Middle East, and served as a forum
for collaboration and discussion, and the exchange of new ideas
pertaining to the mobile industry.
• The PNR (Payment Notification Report) electronic format
includes a pre-defined set of financial data to be provided by
the payer to the payee. Benefits include faster reconciliation
of payments and lower risks of manual errors during the
financial clearing process.
The 3rd wave of the Annual Client Satisfaction Index (CSI)
survey was launched in September, as a continuous and ongoing
process to measure client satisfaction. The Index forms part of
EDCH’s targets, and the project is scheduled for completion in
February 2012.
EDCH successfully completed deployment of EMMTH (The EDCH
Mobile Money Transactions Hub) services during the year, and is
currently serving Etisalat subscribers and roamers in the UAE, Saudi
Arabia and Egypt. The state-of-the-art mobile money transaction
service allows mobile operators’ subscribers to use their mobiles as
wallets, enabling quick and easy financial transactions.
EMMTH generated strong revenues in 2011, and is anticipated
to become a key differentiator to support customer acquisition
and retention across the world, and increase revenue for mobile
operators within the hub.
51
52
Etisalat Services Holding - E-Marine
As the undisputed leader of the submarine cable industry in
the region, and a significant player across international borders,
E-Marine continuously strives to exceed client expectations in
keeping islands, countries and continents connected.
The year 2011 was no different in maintaining this position
- despite stiff competition - and the company managed to
achieve significant geographical expansion while retaining
market leadership.
E-Marine’s coverage area has increased steadily in the past
few years, and by the end of 2011, included more than 85,000
kilometres of cabling in the Red Sea, the Indian Ocean, the
Western Indian Ocean, and East Africa.
In order to meet mounting demands for wet plant storage,
E-marine expanded its storage facilities in Salalah - Oman, and
the new 420 square metre facility was made operational in
November 2011.
A new work-class ROV, Seaeye Jaguar, was successfully installed
in Cable Ship Etisalat, making the entire fleet of E-marine vessels
ROV-equipped. Seaeye Jaguar facilitates numerous cabling
processes while ensuring reliability and complete redundancy
throughout the vessel. The ROV is also equipped with selfdiagnostics to fix problems even when the device is in operation.
With an operational depth of 3,000 msw, and the ability of
working up to 6,000 msw, most sub-sea applications fall within
its range and capabilities.
Backed by strategically located vessels and cable storage depots,
and highly qualified technical teams, E-Marine offers both
customised and comprehensive services. Full package solutions
are made available to all cable maintenance contracts, with
mutual backup between cable ships.
E-Marine has begun studying various methods to get closer
to clients and get better understanding of their needs. The
company already maintains an integrated QHSE (quality, health,
safety and environment) management system, meeting the
requirements of ISM codes, local and international rules and
regulations, and ISO 9001:2000, ISO 14001:2004 and OHSAS
18001: 1999 standards.
Etisalat Services Holding - Etisalat Academy
Working in partnership with global telecom vendor Huawei
Ltd, Etisalat Academy introduced the first certified Long Term
Evolution (LTE) programme in the Middle East in 2011, to
develop a community of highly skilled and certified professionals
with a comprehensive understanding of LTE.
programme is geared to provide technicians with intrinsic
knowledge of fibre technology and networks, together
with crucial skills to install and test networks to accepted
international industry norms.
The LTE certification programme translates to quicker deployment
and launch of LTE networks, a faster learning curve for staff, and
strategic understanding of technical and product challenges for
operators. Based on the Huawei platform and equipment,
hands-on training is provided in segments like commercialisation,
operations, maintenance, planning and optimisation.
Based on several home-grown structured cabling programmes,
and working in association with US-based Fibre Optic Association
(FOA), Etisalat Academy continues to deliver training that makes a
significant impact on profits. All training is geared to ensure that
technology deployment is done correctly at first run - resulting in
increased efficiency and reduced manpower costs - and that the
skill pool is constantly upgraded.
Etisalat Academy boosted its portfolio of offerings during
the year, with the introduction of the Certified Fibre Optic
Certification (CFOT), in an effort to standardise implementation
of structured fibre cabling across Middle East and North Africa,
and to reduce associated downtimes and costs. The CFOT
The company believes in knowing and understanding every
client, separately, and in their natural environments, and are
constantly involved in field visits. These consultative visits are
driven by experts, with fit-for-purpose multi-lingual solutions
that help drive value creation.
53
During 2011, Etisalat Academy developed two key programmes
on Management Succession and Graduate Trainees for Etisalat
Afghanistan, and supported Zantel - Tanzania in their transition
from 2G and CDMA 2000 networks to WCDMA based on HSPA+.
In Pakistan, the company ran a Strategic Leadership Programme
and a Leadership Assessment for Senior Managers, to address
Ufone’s 3G planning and design requirements. Also in Saudi
Arabia, an Advanced Communications and Customer Service
Excellence was organised for Mobily call centre personnel.
Etisalat Academy was ranked the top training company in the
Emirates Environmental Group’s (EEG) recycling campaign, and
was presented an award for its recycling efforts. The company
recycled 15,900 kilograms of paper, and saved 50 cubic metres
of landfill which resulted in a reduction of greenhouse gas
emissions (GHG) by almost 62 metric tonnes.
Etisalat Academy convened a private seminar in November, for
senior executives of Etisalat, addressed by Harvard professor,
Srikant Datar. Leadership, Strategy & Vision: Challenges of
Implementation and Execution focussed on how successful
companies translate vision and strategy into action. The seminar
developed an actionable framework for the team to successfully
implement strategies as they build Etisalat into an even more
competitive, high performance organisation.
The year drew to a close with a Group Training Managers’
Forum (TMF) organised in December, to bring together training
managers from across the Etisalat Group. This event highlighted
the cumulative experience available within the Academy, and the
significant role it plays as a training and development solutions
provider for the Group. The forum also focused on examples
of good practice, shared experiences and approaches, and
opportunities for collaboration.
Other ongoing green initiatives include saving electricity usage
through efficient management of HVAC, cutbacks in water
usage, using 100% recycled paper for printing, offsetting
carbon footprint with tree planting, and commemorating a
‘Green Day’ for clean up and collection of reusable stationery,
among other projects – all of which have led to several
Certificates of Appreciation from the EEG.
Etisalat Services Holding - Etisalat Facilities
Management (E-FM)
Etisalat Facilities Management (E-FM) continued to provide its
services across the UAE, by maintaining and managing a diverse
range of facilities and assets at airports, high rises, data centres
and GSM sites across the country.
E-FM’s client base includes Sheikh Zayed Grand Mosque
Centre, Abu Dhabi Airports Company, and Sharjah International
Airport Etisalat, and the bouquet of services provided through
a single-window-solution include audits and maintenance of
plant equipment, UPS systems, generators and DC systems,
and cleaning and security. E-FM had approximately 5,000 site
locations at the end of 2011, making it the biggest geographical
coverage network in the UAE’s facilities management business.
E-FM gained several new customers during the year, prominent
among which was the contract awarded by Musanada, the Abu
Dhabi General Services Company, for 189 government buildings
across the emirate. The Musanada contract and a new joint
venture with Emirates Transport have particularly complemented
E-FM’s operational results. In addition, the use of Maximo TM
and the strengthening of various communication systems and
processes have placed the company in the top echelons of the
region’s facilities management industry.
The company was certified for ISO 14001:2004 and OHSAS
18001:2008 in early 2011. As part of its commitment to the
industry and the country, E-FM was a principal sponsor of the
FM Expo held in Dubai in 2011, and has committed to do so
again next year.
54
Etisalat Services Holding - Etisalat Information Services
Etisalat Information Services (eIS) was formerly known as
Etisalat Directory Services, and changed its scope in 2011 from
‘directory services’ to ‘information services’, to keep abreast of
redefined business objectives.
Further, eIS has obtained media licenses to cover all seven
emirates, which will open new doors for the business unit and
help in expansions with new opportunities.
During the year, eIS joined Local Search Association, and became
part of the growing global community in providing robust
solutions for print, online, and mobile platforms.
eIS partnered with Express Print Publishers LLC for publishing
Etisalat’s print directories of White and Yellow Pages, and the
online Yellow Pages Directory (www.yellowpages.ae) together
with their mobile platforms. The upgraded version of the Yellow
Pages iPhone application now provides a range of new features
and enhancements, including a bi-lingual (English and Arabic)
interface, special discounts and deals, and user reviews about
most listings. This application is currently the most complete
and accurate directory in the UAE.
The printed publications of the annual White and Yellow
pages had a boost with a new distribution channel: additional
dispensers were placed at all Etisalat business centres and
outlets, allowing customers to pick them off the shelf.
With ever-increasing traffic on both, internet and mobile portals,
eIS continues to emphasise services in enhancing usability and
search functionalities.
Etisalat Services Holding - Etisalat Real Estate (E-RE)
Etisalat Real Estate (E-RE) put forth an initiative to obtain legal
commercial registration, and achieved it in July 2011, thereby
becoming a limited liability company under Etisalat Services
Holding (ESH). This achieves the dual purpose of better serving
external clients, and becoming a revenue centre for the Group.
During the course of the year, E-RE launched an initiative called
Asset Optimisation, with the aim of preserving, protecting and
optimising its property assets in the UAE. The initiative covers
specific segments on office space utilisation and optimisation,
re-usage of redundant or excess technical and telecom space,
leasing of retail space, and protection of identified plans and sites.
E-RE has a comprehensive portfolio of buildings, GSM sites and
shelters, towers, monopoles, and a power plant, and the launch
of the Real Estate Management System (REMS) aggregates data
and information about all these properties into a single system.
55
Etisalat Services Holding - Tamdeed Projects
Tamdeed Projects is actively developing advanced networks that
will enable people to develop, learn, grow, and communicate
their interests through state-of-the-art infrastructure solutions
and by mastering the industry.
In 2011, Tamdeed aligned its service delivery portfolio to
eliminate pain points across various regions and business
solutions for Etisalat UAE - by creating a products and services
roadmap for ICT market opportunities, increasing the size of ICT
related areas, and providing dedicated teams for eLife.
In a focussed attempt to reach enterprise customers and
partnering with them as a Value Added System Integrator,
Tamdeed has engaged in talks with Etisalat Business Solutions
for a Preferred Service Delivery Partner agreement. This bilateral
collaboration will offer innovative service delivery solutions
which reduce complexity, drive operational efficiency and
increase organisational profits.
Tamdeed has expanded its portfolio of products and services
in the passive networks environment, and launched IT based
products and services for active networks. The company
currently serves the UAE and its neighbours with turn-key
software, solutions and services, system integration, and
consulting services.
Internally, the company customised and implemented
Maximo Enterprise Solutions to achieve project lifecycle and
maintenance management for all its projects on a single
platform. Maximo enables maximised values of critical business
and project lifecycles, with workflows and a real-time alerting
environment that enforces best practices.
During 2011, Tamdeed designed, developed, and implemented
the 800-87787 (TPSUP) customer contact centre to offer strong
and disciplined customer service management in accordance to
contractual commitments and SLAs. Meanwhile, the company’s
Customer Satisfaction Index (CSI) monitors, measures, and
proposes corresponding corrective actions.
The benefits of the new REMS include automation of updates,
consolidation of data, business intelligence and analytics,
cross-departmental usage, scalability, and full integration.
A new initiative was launched to retain current customers and
help them overcome various financial challenges and pressures
on the local real estate market. This involved introducing
greater flexibility in market rental rates and financial terms, and
expanding additional leasing opportunities.
Participating in the broader customer service programme
initiated by ESH, E-RE proposed a comprehensive and decisive
communication plan to make the community more aware of its
role and services. E-RE also participated in the Etisalat Group
sponsored initiative to attain ISO 14001certification, and is
currently engaged in pursuing the certification independently.
56
Human Capital
Etisalat’s Human Resources teams initiated several major programmes in 2011 clustered around customer service, frontline training, and job-specific skill
gaps, and geared towards organisational efficiency and effectiveness across all operations.
Etisalat UAE
International operations
The SERVE programme is a culture change initiative that is
designed to improve customer experience and employee
satisfaction. During the course of the year HR identified more
than 100 SERVE Champions, and empowered them to execute
their training to frontline staff. These Champions have already
trained more than 80% of the workforce, and by the start of
2012, all 4,000 frontline staff will have completed their training.
The HR value proposition of Etisalat 2.0 Transformation
Programme commenced with a performance and talent
management pilot for the central marketing function. The
project is streamlined to link business strategy to talent with
key revisions on balanced metrics and shareholder revenue
drivers, and with performance tracking measures to achieve
valued targets.
In Sri Lanka, an Elite Team was created to respond directly and
promptly to high net worth individuals, and plans are underway
to launch a Customer Value Management project to enable
behavioural segmentation.
In Sudan, Canar strengthened its employee engagement
programme with the launch of the Fikra Scheme, an initiative
that encourages ideas and decision making among employees.
Zantel Tanzania ran a detailed customer satisfaction survey
in Zanzibar and Pemba to gather feedback on customer
experiences with network, data, and voucher distribution.
As a direct consequence of the survey, not only were leading
customers offered high-end handsets and free modems,
but high performing employees were also rewarded with
promotions, certificates, and salary increments.
The People Capability Building initiative is geared to strengthen
the strategic capabilities of Etisalat staff by providing them
opportunities in multi-skilling and/or re-skilling with a focus
on job specific competence and customer-centric behaviour.
As part of this initiative, 340 employees were awarded for their
commitment, dedication and performance at the Excellent
Performance Award Ceremony 2011.
In Q4 2011, HR function rolled out a Group initiative entitled ‘HR
Excellence’, as a journey of continuous improvement leading to
improved results on people, customers and society at large.
In Q3 2011, Etisalat Misr launched its largest initiative, ‘Give
Back’, enabling all employees to contribute personally to the
wellbeing of society, by supporting charitable organisations of
their choice through the Etisalat intranet portal. In addition to
monetary donations of EGP 202,544, employees also helped
with a food programme held during Ramadan.
In Nigeria, Etisalat continues to reward and encourage employees
and distribution partners with a scheme that celebrates high
sales across all product lines. The second edition of their
performance awards held in 2011 underscored their critical
importance in achieving strategic goals, and overall success.
Etisalat’s organisation structure was aligned to enhance
efficiencies for business areas earmarked for outsourcing and
centralisation, staff optimisation and rationalisation were
deployed to improve productivity and performance, and staff
development programmes were held to improve operational
effectiveness in middle and upper-middle management, and
drive organisational business strategies towards innovation.
A series of challenges and competitions were added to 1999’s
Al Mawrid Idea Management scheme, with tangible recognition
and rewards. New objectives were also linked to corporate
strategy to support customer-centricity, and to enhance
innovation and productivity in the organisation.
The Etisalat British Telecom Innovation Centre (EBTIC) aims
to promote technology transfer, research training and open
innovation in areas of strategic importance for its founding
partners and the UAE. The year 2011 saw a major achievement
when the secondment scheme for Etisalat’s Emirati employees
was approved and applauded. The third batch of candidates
completed Future Leaders, the managerial competency
programme designed for Emirati nationals in Etisalat.
HR continued its many efforts to build the brand and imagery
of Etisalat at career fairs, through recruitment campaigns, and
by participating in events with such opportunities. Key events
during the year included Nationalisation Day, Tawdheef, and the
12th National Career Exhibition in the UAE.
Recognising and rewarding innovative ideas continues to be a
key strategic objective for the HR department at Etisalat Misr.
In 2011, a special team was assigned to assess and evaluate
original and beneficial ideas from employees that are aligned
with strategic objectives, and later, to incorporate them into the
company’s business activities. Winning ideas are rewarded with
cash prizes, or with membership to the company’s Innovation
Club with its many privileges. Grand ideas for specific business
objectives are rewarded handsomely, with a cup of recognition
and a substantial monetary award. Innovators are also invited
to join the implementation team that translate ideas into useful
products or services.
The REYADA programme provides high-level training in strategy
development and leadership skills for 55 Etisalat calibres. The
three elements of the training include academics, corporate
challenges, and rotating work assignments in different
functions, companies or countries.
57
58
Corporate Governance
The General Assembly
The Board of Directors
The General Assembly is composed of all shareholders of the
Corporation. The General Assembly is entrusted with approving
the Board’s Annual Report on the Corporation’s activities and
financial position during the preceding financial year. The
Assembly is also entrusted with approving the report of the
external auditors, discussing and approving the balance sheet,
and the profit and loss account for the previous financial year.
The General Assembly also appoints the external auditors
and approves the Board’s recommendations regarding the
allocation of profit. The General Assembly exercises all powers
of the Corporation within the limits of the law and the Articles
of Association.
The Board of Directors carries out the Corporation’s business
and for that purpose, exercises all powers of the Corporation,
except those reserved by Law or the Articles of Association for
the General Assembly of the Corporation.
The Board of Directors of Etisalat is formed under its Articles
of Association and the Federal Law No 1 of 1991. Article 25
of the Article of Association of Etisalat (revised by Article 80
of the Federal Law No.3 of 2003) specifies that the number of
Directors on the Board shall be eleven.
Seven Directors on the Board, including the Chairman of the
Board of Directors, are appointed by Federal Decree and are
tasked with representing the Government. The remaining four
members of the Board of Directors are elected by National (nongovernment) shareholders who hold 40% of the voting power of
the shareholders.
The Investment Committee
Four Board Committees have been established to assist the
Board with its responsibilities to provide leadership and effective
governance of the Corporation.
The Charters for each Committee provide the roles and
delegated authorities for each Committee. The Committees
may also have powers vested in them through a Delegation of
Authority from the Board of Directors. Application of powers
vested under these Delegations will be monitored as part of the
internal and statutory audit procedures.
The Executive Committee
The primary purpose of the Executive Committee is to make
decisions on certain matters delegated to it by the Board of
Directors. The Committee meets more frequently in order to
expedite operational matters, and must report decisions and
actions to the subsequent Board of Directors meeting. It must
be chaired by a member of the Board of Directors.
The Audit and Risk Committee
The Audit and Risk Committee of Etisalat currently monitors
the audit and risk management functions of the Corporation.
The Committee is comprised of three Non- Executive
Directors and one outside member who brings additional
accounting, financial and technical expertise to the Audit
and Risk Committee.
The Audit and Risk Committee is entrusted with tasks and
duties to assist the Board in performing its financial and
governance obligations.
The primary purpose of the Investment Committee is to make
decisions on certain matters delegated to it by the Board of
Directors. The Committee meets to make certain decisions in
connection with Etisalat domestic and international investments
and projects, and must report decisions and actions to the
subsequent Board of Directors meeting.
The Investment Committee is composed of five members of the
Board of Directors and at least one member of the Committee
should have significant, recent and relevant experience in
financial and investment matters.
Operating Structure of the Corporation
During 2011 ETISALAT continued to implement its revised group
structure which was commenced in 2009. The purpose was to
manage its international expansion strategy, protect value from
the Corporation’s United Arab Emirates operations, secure value
creation from its eighteen international operations, and to gain
the trust of its stakeholders by putting in place a solid structure
and governance and adherence to best practices.
At the level of the United Arab Emirates, the Group organisation
structure features two autonomous Operating Units: Etisalat
UAE Unit (which is entrusted with provisioning Licensed Telecom
Services in the United Arab Emirates); and the Etisalat Services
Unit (a wholly owned holding company entrusted with providing
certain non-core, non-telecom services to the Corporation, as
well as to third parties).
The Group exercises and sets its various activities and
responsibilities and sets its key corporate policies, prepares
plans, and monitors the operational and financial performance
of its operating companies, and reports the same to the Board
of Directors and the Executive Committee on a regular basis.
The Compensation Committee
The Compensation Committee of ETISALAT has the primary
responsibility to provide comprehensive direction on all
compensation and beneficial matters for Etisalat’s staff. It
aims to ensure that its employment packages are externally
competitive and internally equitable to support the Corporation’s
strategy and to attract, retain and motivate a competent and
result-oriented workforce.
The Committee is currently entrusted with tasks and duties
to assist the Board of Directors and senior management in
performing their obligations.
61
62
Independent Auditors’ Report to the Shareholders
Report on the Consolidated Financial Statements
We have audited the accompanying consolidated financial statements of Emirates Telecommunications Corporation
(“the Corporation”) and its subsidiaries (together “the Group”) which comprise the consolidated statement of financial position
as at 31 December 2011 and the consolidated income statement, consolidated statement of comprehensive income, consolidated
statement of changes in equity and consolidated statement of cash flows for the year then ended, and a summary of significant
accounting policies and other explanatory information.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with
International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the
preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in
accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and
perform the audit to obtain reasonable assurance whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial
statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement
of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider
internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design
audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of
the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness
of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of
the Group as at 31 December 2011, and its financial performance and its cash flows for the year then ended in accordance with
International Financial Reporting Standards.
Report on Other Legal and Regulatory Requirements
We have obtained all the information and explanations considered necessary for the purposes of our audit. The Corporation
has maintained proper books of account and has carried out physical verification of inventories in accordance with properly
established procedures and the financial information included in the Chairman’s statement is consistent with the books of account
of the Corporation. Nothing has come to our attention which causes us to believe that the Corporation has breached any of the
applicable provisions of the UAE Federal Act No. (1) of 1991, as amended by Decretal Federal Code No. 3 of 2003, or of its Articles of
Association, which would materially affect its activities or its financial position as at 31 December 2011.
PricewaterhouseCoopers
Abu Dhabi, United Arab Emirates
Jacques E. Fakhoury (Reg. No. 379)
Deloitte & Touche (M.E.)
Abu Dhabi, United Arab Emirates
Saba Y. Sindaha (Reg. No. 410)
20 February 2012
63
64
Financials
Consolidated Income Statement
Consolidated Statement of Comprehensive Income
Notes
Revenue
2011
AED’000
32,241,873
2010
AED’000
31,929,488
5
9
13, 14
(19,964,444)
(3,044,064)
1,208,472
10,441,837
(18,545,525)
1,243,229
14,627,192
Federal royalty
Operating profit
5
(5,839,019)
4,602,818
(7,630,750)
6,996,442
Finance income
Finance costs
Profit before tax
6
7
696,057
(663,375)
4,635,500
917,578
(384,836)
7,529,184
Taxation
Profit for the year
8
(25,352)
4,610,148
(100,406)
7,428,778
5,839,019
(1,228,871)
4,610,148
7,630,750
(201,972)
7,428,778
AED 0.74
AED 0.97
Operating expenses
Impairment losses
Share of results of associates and joint ventures
Operating profit before federal royalty
Profit attributable to:
The equity holders of the Corporation
Non-controlling interests
Earnings per share
Basic and diluted
Chairman
The accompanying notes on pages 71 to 111 form an integral part of these consolidated financial statements.
The Independent Auditors’ report is set out on page 63.
65
33
2011
AED’000
2010
AED’000
Profit for the year
Total comprehensive income for the year
(653,695)
(59,560)
(713,255)
4,610,148
3,896,893
(351,934)
341
(351,593)
7,428,778
7,077,185
Comprehensive income attributable to:
The equity holders of the Corporation
Total comprehensive income for the year
5,434,165
(1,537,272)
3,896,893
7,367,738
(290,553)
7,077,185
Other comprehensive loss
Exchange differences on translation of foreign operations
(Loss)/gain on revaluation of available-for-sale financial assets
Vice Chairman
66
Financials continued
Consolidated Statement of Financial Position
as at 31 December 2011
2011
AED’000
2010
AED’000
9
9
10
11
13, 14
15
16
17
8
1,872,893
10,277,623
20,613,995
42,775
16,999,448
364,806
2,953,472
303,814
53,428,826
3,120,704
12,429,597
20,675,359
47,910
16,165,069
517,140
2,963,422
12,673
361,465
56,293,339
18
19
16
17
15
20
345,219
8,732,715
308,712
12,673
91,850
9,971,647
19,462,816
72,891,642
316,261
8,448,082
260,624
12,080
10,276,744
19,313,791
75,607,130
Notes
Non-current assets
Goodwill
Other intangible assets
Property, plant and equipment
Investment property
Investments in associates and joint ventures
Other investments
Loans to associates
Finance lease receivables
Deferred tax assets
Current assets
Inventories
Trade and other receivables
Due from associates and joint ventures
Other investments
Cash and cash equivalents
Total assets
Notes
21
22
23
24
25
17,944,597
2,435,092
2,967,240
59,261
778,494
24,184,684
20,078,214
1,195,071
2,956,017
66,725
181,961
24,477,988
Non-current liabilities
Trade and other payables
Borrowings
Payables related to investments and licence
Derivative financial instruments
Deferred tax liabilities
Finance lease obligations
Provisions
Provision for end of service benefits
21
22
23
26
8
24
25
27
651,802
4,260,919
354,861
672,602
55,006
179,906
828,011
7,003,107
31,187,791
41,703,851
1,089,769
5,204,599
19,841
382,145
772,499
172,137
88,544
834,283
8,563,817
33,041,805
42,565,325
28
29
7,906,140
28,686,726
2,786,813
39,379,679
2,324,172
41,703,851
7,906,140
28,036,163
2,773,622
38,715,925
3,849,400
42,565,325
Total liabilities
Net assets
Chairman
67
2010
AED’000
Current liabilities
Borrowings
Payables related to investments and licence
Provisions
Equity
Share capital
Reserves
Retained earnings
Equity attributable to the equity holders of the Corporation
Total equity
2011
AED’000
Vice Chairman
68
Total equity
AED’000
40,389,298
7,428,778
(351,593)
(335,041)
(60,795)
(13,197)
(4,492,125)
42,565,325
42,565,325
4,610,148
(713,255)
(14,683)
(4,743,684)
41,703,851
AED’000
3,997,689
(201,972)
(88,581)
132,474
9,790
-
-
3,849,400
3,849,400
(1,228,871)
(308,401)
(4,987)
17,031
-
2,324,172
39,379,679
2,786,813
8,070,000
7,850,000
7,906,140
56,641
(335,865)
12,963,491
82,459
(9,696)
(17,031)
(4,743,684)
(9,696)
(1,072,448)
(4,743,684)
561,108
248,000
200,000
-
46,309
-
-
5,839,019
(404,854)
5,839,019
(59,560)
-
-
(345,294)
-
38,715,925
2,773,622
142,019
7,822,000
7,650,000
Balance at
1 January 2011
Profit for the year
Other movements in
non-controlling interests
Transfer to reserves
Dividends
Balance at
31 December 2011
7,906,140
10,332
9,429
12,402,383
38,715,925
2,773,622
142,019
7,822,000
7,906,140
7,650,000
10,332
9,429
12,402,383
(4,492,125)
(4,492,125)
(718,740)
718,740
-
-
69
-
(70,585)
(13,197)
(70,585)
(2,381,236)
(13,197)
724,000
-
700,000
-
3,618
-
-
953,618
-
-
(467,515)
(467,515)
-
Balance at
1 January 2010
Profit for the year
Acquisition of
Other movements in
Transfer to reserves
Loss of interest in subsidiaries
Bonus issue of 718.7 million
fully paid shares of AED 1
Dividends
Balance at
31 December 2010
-
-
-
-
-
-
7,630,750
(263,012)
7,630,750
341
-
-
(263,353)
36,391,609
2,567,530
141,678
12,167,505
7,098,000
6,950,000
7,187,400
6,714
272,782
AED’000
AED’000
AED’000
AED’000
AED’000
AED’000
AED’000
AED’000
AED’000
Retained
earnings
Investment
revaluation
reserve
General
reserve
Translation
reserve
Statutory
reserve
Asset repla
cement
reserve
Development
reserve
Share
capital
Reserves (see note 29)
Attributable to the equity holders of the Corporation
Consolidated Statement of Changes in Equity
Total
shareholders’
equity
Noncontrolling
interests
Consolidated Statement of Cash Flows
2011
AED’000
4,602,818
2010
AED’000
6,996,442
2,574,038
813,802
3,044,064
(1,208,472)
702,631
(15,056)
10,513,825
2,179,967
804,684
(1,243,229)
530,109
(10,641)
209,699
9,467,031
(23,951)
(48,088)
(193,240)
(2,443,761)
7,804,785
(200,615)
(123,354)
7,480,816
(55,202)
70,549
(1,997,400)
474,300
7,959,278
(137,492)
(15,230)
7,806,556
Cash flows from investing activities
Acquisition of subsidiaries, net of cash acquired
Acquisition of other investments
Purchases of property, plant and equipment
Proceeds on disposal of property, plant and equipment
Purchase of other intangible assets
Proceeds on disposal of intangible assets
Dividend income received from associates and other investments
Finance income received
Net cash used in investing activities
(4,093,060)
97,142
(207,036)
5,201
751,021
894,318
(2,552,414)
(335,041)
(23,292)
(5,534,732)
88,294
(364,258)
50,611
335,936
929,093
(4,853,389)
Cash flows from financing activities
Proceeds from borrowings and finance lease obligations
Repayments of borrowings and finance lease obligations
Loans to associates
Finance costs paid
Redemption of preference shares in a subsidiary
Dividends paid
Net cash used in financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Effect of foreign exchange rate changes
Cash and cash equivalents at the end of the year
4,958,802
(4,439,600)
(546,076)
(616,899)
(4,743,684)
(5,387,457)
(459,055)
10,276,744
153,958
9,971,647
2,939,899
(747,803)
(1,735,469)
(288,635)
(47,469)
(4,492,125)
(4,371,602)
(1,418,435)
11,309,185
385,994
10,276,744
Notes
Operating profit
Adjustments for:
Depreciation
Amortisation
Impairment losses
Share of results of associates and joint ventures
Provisions and allowances
Dividend income from other investments
Other non cash movements
10, 11
9
9
13, 14
Changes in working capital:
Inventories
Due from associates and joint ventures
Trade and other receivables
Cash generated from operations
Income taxes paid
Payment of end of service benefits
Net cash generated from operating activities
27
20
70
Notes to the Consolidated Financial Statements
1. General information
The Emirates Telecommunications Corporation Group (“the Group”) comprises the holding company Emirates
Telecommunications Corporation (“the Corporation”) and its subsidiaries. The Corporation was incorporated in the United
Arab Emirates (“UAE”), with limited liability, in 1976 by UAE Federal Government decree No. 78, which was revised by the UAE
Federal Act No. (1) of 1991 and further amended by Decretal Federal Code No. 3 of 2003 concerning the regulation of the
telecommunications sector in the UAE. In accordance with Federal Law No. 267/10 for 2009, the Federal Government of the
UAE transferred its 60% holding in the Corporation to the Emirates Investment Authority with effect from 1 January 2008,
which is ultimately controlled by the UAE Federal Government. The address of the registered office is P.O. Box 3838, Abu Dhabi,
United Arab Emirates. The Corporation’s shares are listed on the Abu Dhabi Securities Exchange.
The principal activity of the Group is to provide telecommunications services, media and related equipment including the
provision of related contracting and consultancy services to international telecommunications companies and consortia.
These activities are carried out through the Corporation (which holds a full service licence from the UAE Telecommunications
Regulatory Authority valid until 2025), its subsidiaries, associates and joint ventures.
These financial statements were approved by the Board of Directors and authorised for issue on 20 February 2012.
2. Significant accounting policies
The significant accounting policies adopted in the preparation of these consolidated financial statements are set out below.
Basis of preparation
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”).
The consolidated financial statements are prepared under the historical cost convention except for the revaluation of certain
financial instruments and in accordance with the accounting policies set out herein.
Changes in accounting policies
There are no Standards or Interpretations that were effective for the first time for the financial year beginning on or after
1 January 2011 that had a material impact on the Group.
At the date of the consolidated financial statements, the following Standards, Amendments and Interpretations which
have not been applied, were in issue but not yet effective:
Amendments to IFRS 7 Financial Instruments - Disclosures: Transfers of financial assets
Amendments to IAS 12 Income Taxes - Deferred taxes: Recovery of underlying assets
Amendments to IAS 1 Presentation of Financial Statements:
Presentation of Items of Other Comprehensive Income
Amendments to IAS 19 Employee Benefits
IAS 27 (revised 2011) Separate Financial Statement
IAS 28 (revised 2011) Investments in Associates and Joint Ventures
IFRS 9 Financial Instruments
IFRS 10 Consolidated Financial Statements
IFRS 11 Joint Arrangements
IFRS 12 Disclosure of Interests in Other Entities
IFRS 13 Fair Value Measurement
71
Effective for annual periods
beginning on or after
1 July 2011
1 January 2012
1 July 2012
1 January 2013
1 January 2013
1 January 2013
1 January 2015
1 January 2013
1 January 2013
1 January 2013
1 January 2013
The directors are in the process of assessing the full extent of the impact of the above Standards and Interpretations, but do not
expect that the adoption of the standards listed above will have a material impact on the consolidated financial statements of the
Group in future periods, except as follows:
IFRS 9 will impact both the measurement and disclosures of financial instruments;
IFRS 12 will impact the disclosure of interest in other entities; and
IFRS 13 will impact the measurement of fair value for certain assets and liabilities as well as the associated disclosures.
Beyond the information above, it is not practicable to provide reasonable estimate of the effect of these standards until a detailed
review has been completed.
Basis of consolidation
These consolidated financial statements incorporate the financial statements of the Corporation and entities controlled by the
Corporation up to 31 December 2011. Control is achieved where the Group has the power to govern the financial and operating
policies of an investee entity so as to obtain benefits from its activities. The existence and effect of potential voting rights that are
currently exercisable or convertible are considered when assessing whether the Group has the power to control another entity.
Non-controlling interests in the net assets of consolidated subsidiaries are identified separately from the Group’s equity therein.
Non-controlling interests consist of the amount of those interests at the date of the original business combination and the noncontrolling interests share of changes in equity since the date of the business combination. Total comprehensive income within
subsidiaries is attributed to the Group and to the non-controlling interest even if this results in non-controlling interests having a
deficit balance.
Subsidiaries are consolidated from the date on which effective control is transferred to the Group and are excluded from
consolidation from the date that control ceases.
Intercompany transactions, balances and any unrealised gains/losses between Group entities have been eliminated in the
consolidated financial statements.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used in line
with those used by the Group.
Business combinations
The acquisition of subsidiaries are accounted for using the purchase method. The cost of an acquisition is measured as the
aggregate of the fair value, at the date of exchange, of the assets given, equity instruments issued and liabilities incurred
or assumed. The acquiree’s identifiable assets and liabilities that meet the conditions for recognition under IFRS 3 Business
Combinations, are recognised at their fair values at the acquisition date. Acquisition-related costs are recognised in the
consolidated income statement as incurred.
Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost of the
business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities
recognised. If, after reassessment, the Group’s interest in the net fair value of the acquiree’s identifiable assets and liabilities
exceeds the cost of the business combination, the excess is recognised immediately in the consolidated income statement.
The interest of minority shareholders in the acquiree is initially measured at the minority’s proportion of the net fair value of the
assets, liabilities and contingent liabilities recognised.
72
Notes to the Consolidated Financial Statements continued
2. Significant accounting policies (continued)
Associates and joint ventures
Associates and joint ventures are those companies which the Group jointly controls or over which it exercises significant
influence but it does not control. Investments in associates and joint ventures are accounted for using the equity method of
accounting. Investments in associates and joint ventures are carried in the consolidated statement of financial position at cost
as adjusted by post-acquisition changes in the Group’s share of the net assets of the associates and joint ventures less any
impairment in the value of individual investments. Losses of the associates and joint ventures in excess of the Group’s interest
are not recognised unless the Group has an obligation to fund such losses. The carrying values of investments in associates
and joint ventures are reviewed on a regular basis and if an impairment in the value has occurred, it is written off in the period
in which those circumstances are identified.
Any excess of the cost of acquisition over the Group’s share of the fair values of the identifiable net assets of the associates at
the date of acquisition is recognised as goodwill and included as part of the cost of investment. Any deficiency of the cost of
acquisition below the Group’s share of the fair values of the identifiable net assets of the associates at the date of acquisition
is credited to the consolidated income statement in the year of acquisition.
The Group’s share of associates’ and joint ventures’ net income is based on the most recent financial statements or interim
financial statements drawn up to the Group’s reporting date. Accounting policies of associates and joint ventures have been
adjusted, where necessary, to ensure consistency with the policies adopted by the Group.
Where a Group company transacts with an associate or joint venture of the Group, unrealised gains and losses are eliminated
to the extent of the Group’s interest in the relevant entity. Losses may provide evidence of an impairment of the asset
transferred in which case appropriate provision is made for impairment.
Dilution gains and losses arising on deemed disposal of investments in associates and joint ventures are recognised in the
consolidated income statement.
Revenue
Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for
telecommunication products and services provided in the normal course of business. Revenue is recognised net of sales
taxes, discounts and rebates. Revenue from telecommunication services comprises amounts charged to customers in
respect of monthly access charges, airtime usage, messaging, the provision of other mobile telecommunications services,
including data services and information provision and fees for connecting users of other fixed line and mobile networks to
the Group’s network.
Access charges and airtime used by contract customers are invoiced and recorded as part of a periodic billing cycle and
recognised as revenue over the related access period, with unbilled revenue resulting from services already provided from
the billing cycle date to the end of each period accrued and unearned revenue from services provided in periods after each
accounting period deferred. Revenue from the sale of prepaid credit is deferred until such time as the customer uses the
airtime, or the credit expires.
Revenue from data services and information provision is recognised when the Group has performed the related service
and, depending on the nature of the service, is recognised either at the gross amount billed to the customer or the amount
receivable by the Group as commission for facilitating the service.
Incentives are provided to customers in various forms and are usually offered on signing a new contract or as part of a
promotional offering. Where such incentives are provided on connection of a new customer or the upgrade of an existing
customer, revenue representing the fair value of the incentive, relative to other deliverables provided to the customer as
part of the same arrangement, is deferred and recognised in line with the Group’s performance of its obligations relating to
the incentive.
73
In revenue arrangements including more than one deliverable, the arrangement consideration is allocated to each deliverable
based on the fair value of the individual element. The Group generally determines the fair value of individual elements based
on prices at which the deliverable is regularly sold on a standalone basis.
Contract revenue is recognised under the percentage of completion method. Profit on contracts is recognised only when the
outcome of the contracts can be reliably estimated. Provision is made for foreseeable losses estimated to complete contracts.
Revenue from interconnect fees is recognised at the time the services are performed.
Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate
applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial
assets to that asset’s net carrying amount.
Leasing
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of
ownership to the lessee. All other leases are classified as operating leases.
The Group as lessor
Amounts due from lessees under finance leases are recorded as receivables at the amount of the Group’s net investment in
the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the
Group’s net investment outstanding in respect of the leases.
Revenues from the sale of transmission capacity on terrestrial and submarine cables are recognised on a straight-line basis
over the life of the contract.
Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease. Initial direct
costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and
recognised on a straight-line basis over the lease term.
The Group as lessee
Rentals payable under operating leases are charged to the consolidated income statement on a straight-line basis over the
term of the relevant lease. Benefits received and receivable as an incentive to enter into an operating lease are also spread on
a straight-line basis over the lease term.
Foreign currencies
Functional currencies
The individual financial statements of each of the Group’s subsidiaries, associates and joint ventures are presented in the
currency of the primary economic environment in which they operate (its functional currency). For the purpose of the
consolidated financial statements, the results, financial position and cash flows of each Group company are expressed
in UAE Dirhams, which is the functional currency of the Corporation, and the presentation currency of the consolidated
financial statements.
In preparing the financial statements of the individual companies, transactions in currencies other than the entity’s functional
currency are recorded at exchange rates prevailing at the dates of the transactions. At each year end, monetary assets and
liabilities that are denominated in foreign currencies are retranslated into the entity’s functional currency at rates prevailing at
the reporting date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the
rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical
cost in a foreign currency are not retranslated.
74
Foreign currencies (continued)
Consolidation
On consolidation, the assets and liabilities of the Group’s foreign operations are translated into UAE Dirhams at exchange
rates prevailing on the date of the consolidated statement of financial position. Goodwill and fair value adjustments arising on
the acquisition of a foreign entity are also translated at exchange rates prevailing on the reporting date. Income and expense
items are translated at the average exchange rates for the period unless exchange rates fluctuate significantly during that
period, in which case the exchange rates at the date of transactions are used. Exchange differences arising are classified as a
separate component of equity. On disposal of overseas subsidiaries, the cumulative translation differences are recognised as
income or expense in the period in which they are disposed of.
Foreign exchange differences
Exchange differences are recognised in the consolidated income statement in the period in which they arise except for
exchange differences that relate to assets under construction for future productive use. These are included in the cost of
those assets when they are regarded as an adjustment to interest costs on foreign currency borrowings. Exchange differences
on transactions entered into to hedge certain foreign currency risks; and exchange differences on monetary items receivable
from or payable to a foreign operation for which settlement is neither planned nor likely to occur, which form part of the
net investment in a foreign operation are recognised in the foreign currency translation reserve and recognised in the
consolidated income statement on disposal of the net investment.
Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that
necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets,
until such time as the assets are substantially ready for their intended use or sale.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets
is deducted from the borrowing costs eligible for capitalisation.
All other borrowing costs are recognised in the consolidated income statement in the period in which they are incurred.
Government grants
Government grants relating to non-monetary assets are recognised at nominal value. Grants that compensate the Group for
expenses are recognised in the consolidated income statement on a systematic basis in the same period in which the expenses
are recognised. Grants that compensate the Group for the cost of an asset are recognised in the consolidated income
statement on a systematic basis over the expected useful life of the related asset upon capitalisation.
End of service benefits
Payments to defined contribution schemes are charged as an expense as they fall due. Payments made to state-managed
pension schemes are dealt with as payments to defined contribution schemes where the Group’s obligations under the
schemes are equivalent to those arising in a defined contribution scheme.
Provision for employees’ end of service benefits for non-UAE nationals is made in accordance with the Projected Unit Cost
method as per IAS 19 Employee Benefits taking into consideration the UAE Labour Laws. The provision is recognised based on
the present value of the defined benefit obligations.
The present value of the defined benefit obligations is calculated using assumptions on the average annual rate of increase
in salaries, average period of employment of non-UAE nationals and an appropriate discount rate. The assumptions used are
calculated on a consistent basis for each period and reflect management’s best estimate. The discount rates are set in line with
the best available estimate of market yields currently available at the reporting date.
75
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the period. Taxable profit differs from profit as reported in the
consolidated income statement because it excludes items of income or expense that are taxable or deductible in other periods
and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax
rates that have been enacted or substantively enacted by the reporting date.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and
liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is
accounted for using the liability method.
Deferred tax is calculated using relevant tax rates and laws that have been enacted or substantially enacted by the reporting
date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.
Deferred tax is charged or credited in the consolidated income statement, except when it relates to items charged or credited
directly to equity, in which case the deferred tax is also dealt with in equity.
Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to
the extent that it is probable that sufficient taxable profits will be available in the future against which deductible temporary
differences can be utilised.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Such assets and
liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial
recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither taxable
profit nor the accounting profit.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against
current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to
settle its current tax assets and liabilities on a net basis.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates,
and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is
probable that the temporary difference will not reverse in the foreseeable future.
Property, plant and equipment
Property, plant and equipment are stated at cost, less accumulated depreciation and any impairment. Cost comprises the cost
of equipment and materials, including freight and insurance, charges from contractors for installations and building works,
direct labour costs and asset retirement costs.
Assets in the course of construction are carried at cost, less any impairment. Cost includes professional fees and, for
qualifying assets, borrowing costs capitalised in accordance with the Group’s accounting policy. Depreciation of these assets
commences when the assets are ready for their intended use.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when
it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be
measured reliably. All other repairs and maintenance costs are charged to consolidated income statement during the period in
which they are incurred.
76
Intangible assets
Property, plant and equipment (continued)
Other than land (which is not depreciated), the cost of property, plant and equipment is depreciated on a straight line basis
over the estimated useful lives of the assets as follows:
Buildings
Permanent – the lesser of 20 – 50 years and the period of the land lease.
Temporary – the lesser of 4 years and the period of the land lease.
Plant and equipment
Years
Submarine
– fibre optic cables
– coaxial cables
Cable ships
Coaxial and fibre optic cables
Line plant
Exchanges
Switches
Radios/towers
Earth stations/VSAT
Multiplex equipment
Power plant
Subscribers’ apparatus
General plant
Other assets
Motor vehicles
Computers
Furniture and fittings
20
10
15
15
15
5 – 10
5 – 10
10 – 15
5 – 10
10
5
3–8
2–5
3–5
4–5
4 – 10
The assets’ residual values and useful lives are reviewed and adjusted, if appropriate, at each reporting date.
The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales proceeds
and the carrying amount of the asset and is recognised in consolidated income statement.
Investment property
Investment property, which is property held to earn rentals and/or for capital appreciation, is carried at cost less accumulated
depreciation and impairment loss.
(I) Goodwill
Goodwill arising on consolidation represents the excess of the cost of an acquisition over the fair value of the Group’s
share of net identifiable assets of the acquired subsidiary at the date of acquisition. Goodwill is initially recognised as an
asset at cost and is subsequently measured at cost less any accumulated impairment losses.
For the purpose of impairment testing, goodwill is allocated to each of the Group’s cash-generating units (CGUs)
expected to benefit from the synergies of the combination. CGUs to which goodwill has been allocated are tested for
impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable
amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to
reduce the carrying amount of any goodwill allocated to the unit and then to the other non financial assets of the unit
pro-rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognised for goodwill is not
reversed in a subsequent period.
On disposal of a subsidiary, associate or joint venture, the attributable amount of goodwill is included in the
determination of the profit or loss on disposal.
(II) Licences
Acquired telecommunication licences are initially recorded at cost or, if part of a business combination, at fair value.
Licences are amortised on a straight line basis over their estimated useful lives from when the related networks are
available for use. The estimated useful lives range between 10 and 25 years and are determined primarily by reference
to the unexpired licence period, the conditions for licence renewal and whether licences are dependent on specific
technologies.
(III) Internally-generated intangible assets
An internally-generated intangible asset arising from the Group’s IT development is recognised at cost only if all of the
following conditions are met:
• an asset is created that can be identified (such as software and new processes);
• it is probable that the asset created will generate future economic benefits; and
• the development cost of the asset can be measured reliably.
Internally-generated intangible assets are amortised on a straight-line basis over their useful lives of 3-10 years. Where
no internally-generated intangible asset can be recognised, development expenditure is recognised as an expense in the
period in which it is incurred.
(IV) Indefeasible Rights of Use (“IRU”)
IRUs correspond to the right to use a portion of the capacity of a terrestrial or submarine transmission cable granted
for a fixed period. IRUs are recognised at cost as an asset when the Group has the specific indefeasible right to use an
identified portion of the underlying asset, generally optical fibres or dedicated wavelength bandwidth, and the duration of
the right is for the major part of the underlying asset’s economic life. They are amortised on a straight line basis over the
shorter of the expected period of use and the life of the contract which ranges between 10 to 20 years.
Investment properties are depreciated on a straight-line basis over the lesser of 20 years and the period of the lease.
77
78
Impairment of tangible and intangible assets excluding goodwill
The Group reviews the carrying amounts of its tangible and intangible assets whenever there is any indication that those
assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in
order to determine the extent of any impairment loss. Where the asset does not generate cash flows that are independent
from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.
An intangible asset with an indefinite useful life (including goodwill) is tested for impairment annually.
Recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. In assessing value in use, the
estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have
not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying
amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised as an
expense immediately, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as
a revaluation decrease.
Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at
each reporting date. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating
unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not
exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or
cash-generating unit) in prior years. A reversal of an impairment loss is recognised as income immediately, unless the relevant
asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
Inventory
Inventory is measured at the lower of cost and net realisable value. Cost comprises direct materials and where applicable,
direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and
condition. Allowance is made, where appropriate, for deterioration and obsolescence. Cost is determined in accordance with
the weighted average cost method. Net realisable value represents the estimated selling price less all estimated costs of
completion and costs to be incurred in marketing, selling and distribution.
Financial instruments
Financial assets and financial liabilities are recognised in the consolidated statement of financial position when the Group
becomes a party to the contractual provisions of the instrument.
(I)
Fair value
The fair values of financial assets and financial liabilities are determined as follows:
• the fair value of financial assets and financial liabilities with standard terms and conditions and traded on active
liquid markets are determined with reference to quoted market prices; and
• the fair value of other financial assets and financial liabilities are determined in accordance with generally accepted
pricing models based on discounted cash flow analysis using prices from observable current market transactions.
(II)
79
Financial assets
All financial assets are recognised and derecognised on trade date where the purchase or sale of a financial asset
is under a contract whose terms require delivery of the investment within the timeframe established by the market
concerned, and are initially measured at fair value, plus transaction costs, except for those financial assets classified as
at fair value through profit or loss, which are initially measured at fair value.
Financial assets are classified into the following specified categories: ‘held-to-maturity’ investments, ‘available-for-sale’
financial assets and ‘loans and receivables’. The classification depends on the nature and purpose of the financial assets
and is determined at the time of initial recognition.
(III) Effective interest method
The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest
income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts
(including all fees on points paid or received that form an integral part of the effective interest rate, transaction costs and
other premiums or discounts) through the expected life of the financial asset, or, where appropriate, a shorter period.
Income is recognised on an effective interest rate basis for debt instruments that are held-to-maturity, are available-forsale, or are loans and receivables.
(IV) Held-to-maturity investments
Bonds and Sukuk bonds with fixed or determinable payments and fixed maturity dates that the Group has the positive
intent and ability to hold to maturity are classified as held-to-maturity investments. Held-to-maturity investments are
recorded at amortised cost using the effective interest method less any impairment, with revenue recognised on an
effective yield basis. The Group considers the credit risk of counterparties in its assessment of whether such financial
instruments are impaired.
(V)
Available-for-sale financial assets (“AFS”)
Listed securities held by the Group that are quoted in an active market are classified as being AFS and are stated at fair
value. Gains and losses arising from changes in fair value are recognised directly in equity in the investment revaluation
reserve with the exception of impairment losses, interest calculated using the effective interest method and foreign
exchange gains and losses on monetary assets, which are recognised directly in profit or loss. Where the investment
is disposed of or is determined to be impaired, the cumulative gain or loss previously recognised in the investments
revaluation reserve is included in the consolidated income statement.
Dividends on AFS equity instruments are recognised in the consolidated income statement when the Group’s right to
receive the dividends is established.
The fair value of AFS monetary assets denominated in a foreign currency is determined in that foreign currency and
translated at the exchange rate prevailing at the reporting date. The foreign exchange gains/losses that are recognised
in the consolidated income statement are determined based on the amortised cost of the monetary asset. Other foreign
exchange gains/losses are recognised in the consolidated statement of changes in equity.
The Group assesses at each reporting date whether there is objective evidence that AFS assets are impaired. In the case
of equity securities, a significant or prolonged decline in the fair value of the security below its cost is considered as an
indicator that the securities are impaired. Impairment losses recognised in the consolidated income statement on equity
instruments are not reversed through the consolidated income statement.
(VI) Loans and receivables
Trade receivables, loans and other receivables that have fixed or determinable payments that are not quoted in an
active market are classified as ‘loans and receivables’. Loans and receivables are recognised initially at fair value and
subsequently measured at amortised cost using the effective interest method less impairment. Interest income is
recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest
would be immaterial.
80
Financial instruments (continued)
(VI) Loans and receivables (continued)
Appropriate allowances for estimated irrecoverable amounts are recognised in the consolidated income statement where
there is objective evidence that the asset is impaired. The allowance recognised is measured as the difference between
the asset’s carrying amount and the present value of estimated future cash flows discounted at the effective interest
rate computed at initial recognition.
The allowance for doubtful debts reflects estimates of losses arising from the failure or inability of the Group’s
customers to make required payments. The estimates are based on the ageing of customer’s accounts and the Group’s
historical write-off experience.
(VII) Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits and other short-term highly liquid investments
that are readily convertible to a known amount of cash and are subject to an insignificant risk of
changes in value.
(VIII) Financial liabilities
Financial liabilities are classified as either financial liabilities ‘at fair value through profit or loss’ (“FVTPL”) or other
financial liabilities.
(IX) Financial guarantee contract liabilities
Financial guarantee contract liabilities are measured initially at their fair values and are subsequently measured at the
higher of:
• the amount of the obligation under the contract, as determined in accordance with IAS 37 Provisions, Contingent
Liabilities and Contingent Assets; and
• the amount initially recognised less, where appropriate, cumulative amortisation recognised in accordance with the
revenue recognition policies set out above.
(X)
Financial liabilities at FVTPL
Financial liabilities are classified as at FVTPL where the financial liability is either held for trading or it is designated as
such. A financial liability is classified as held for trading if it has been incurred principally for the purpose of disposal in
the near future or it is a derivative that is not designated and effective as a hedging instrument. Financial liabilities at
FVTPL are stated at fair value, with any resultant gain or loss recognised in the consolidated income statement.
(XI) Other financial liabilities
Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs. Other
financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest
expense recognised on an effective yield basis. The effective interest method is a method of calculating the amortised
cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the
rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where
appropriate, a shorter period.
(XII) Derecognition of financial liabilities
The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or
they expire.
81
(XIII) Derivative financial instruments
The Group enters into a variety of derivative financial instruments to manage its exposure to interest rate and foreign
exchange rate risk, including forward foreign exchange contracts, interest rate swaps and cross currency swaps.
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently
remeasured to their fair value at each reporting date. A derivative with a positive fair value is recognised as a financial
asset whereas a derivative with a negative fair value is recognised as a financial liability. The Group does not designate
any financial instruments as hedging instruments, and accordingly all resulting gains or losses arising from the
remeasurement of derivatives are recognised in the consolidated income statement immediately.
(XIV) Embedded derivatives
Derivatives embedded in other financial instruments or other host contracts are treated as separate derivatives when
their risks and characteristics are not closely related to those of host contracts and the host contracts are not measured
at fair value with changes in fair value recognised in the consolidated income statement.
(XV) Hedge accounting
The Group designates certain hedging instruments, which include derivatives, embedded derivatives and non-derivatives
in respect of foreign exchange risk, as either fair value hedges, cash flow hedges, or hedges of net investments in
foreign operations. Hedges of foreign exchange risk on firm commitments are accounted for as cash flow hedges.
At the inception of the hedge relationship, the entity documents the relationship between the hedging instrument and
the hedged item, along with its risk management objectives and its strategy for undertaking various hedge transactions.
Furthermore, at the inception of the hedge and on an ongoing basis, the Group documents whether the hedging
instrument is highly effective in offsetting changes in fair values or cash flows of the hedged item.
(XVI) Put option arrangements
The potential cash payments related to put options issued by the Group over the equity of subsidiary companies are
accounted for as financial liabilities when such options may only be settled other than by exchange of a fixed amount of
cash or another financial asset for a fixed number of shares in the subsidiary.
The amount that may become payable under the option on exercise is initially recognised at fair value within borrowings
with a corresponding charge directly to equity. The charge to equity is recognised separately as written put options
over non-controlling interests, adjacent to non-controlling interests in the net assets of consolidated subsidiaries. For
options that involve a fixed amount of cash for a fixed number of shares in the subsidiary, the Group recognises the cost
of writing such put options, determined as the excess of the fair value of the option over any consideration received, as
a financing cost.
Such options are subsequently measured at amortised cost, using the effective interest rate method, in order to accrete
the liability up to the amount payable under the option at the date at which it first becomes exercisable. The charge
arising is recorded as a financing cost. In the event that the option expires unexercised, the liability is derecognised with
a corresponding adjustment to equity.
(XVII) Derecognition of financial assets
The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire; or it
transfers the financial asset or substantially all the risk and rewards of ownership to another entity. If the Group neither
transfer nor retains substantially all the risks and reward of ownership and continues to control the transferred asset,
the Group recognises its retained interest in the asset and associated liability for amounts it may have to pay. If the
Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues
to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.
82
• long term growth rates in cash flows;
• timing and quantum of future capital expenditure; and
• the selection of discount rates to reflect the risks involved.
Provisions
Provisions are recognised when the Group has a present obligation as a result of a past event, and it is probable that the
Group will be required to settle that obligation. Provisions are measured at the directors’ best estimate of the expenditure
required to settle the obligation at the reporting date, and are discounted to present value where the effect is material.
Transactions with non-controlling interests
The Group applies a policy of treating transactions with non-controlling interest holders as transactions with parties external
to the Group. Disposals to non-controlling interest holders result in gains and losses for the Group and are recorded in the
consolidated income statement. Purchases from non-controlling interest holders result in goodwill, being the difference
between any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary.
Dividends
Dividend distributions to the Group’s shareholders are recognised as a liability in the consolidated financial statements in the
period in which the dividends are approved.
The key assumptions used are detailed on Note 9 of the consolidated financial statements. A change in the key
assumptions or forecasts might result in an impairment of goodwill and investment in associates.
(III) Impairment of intangibles
Impairment testing is an area involving management judgement, requiring assessment as to whether the carrying value
of assets can be supported by the net present value of future cash flows derived from such assets using cash flow
projections which have been discounted at an appropriate rate. In calculating the net present value of the future cash
flows, certain assumptions are required to be made in respect of highly uncertain matters including management’s
expectations of:
• long term growth rates in cash flows;
• timing and quantum of future capital expenditure; and
• the selection of discount rates to reflect the risks involved.
3. Critical accounting judgements and key sources of estimation uncertainty
In the application of the Group’s accounting policies, which are described in Note 2, the directors are required to make
judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent
from other sources. The estimates and associated assumptions are based on historical experience and other factors that are
considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision
and future periods if the revision affects both current and future periods.
The key assumptions concerning the future, and other key sources of estimation uncertainty at the reporting date, that have a
significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year,
are disclosed below.
(I)
Fair value of other intangible assets
On the acquisition of mobile network operators, the identifiable intangible assets may include licences, customer bases
and brands. The fair value of these assets is determined by discounting estimated future net cash flows generated by
the asset, where no active market for the assets exist. The use of different assumptions for the expectations of future
cash flows and the discount rate would change the valuation of the intangible assets.
The relative size of the Group’s intangible assets, excluding goodwill, makes the judgements surrounding the estimated
useful lives critical to the Group’s financial position and performance.
The useful lives used to amortise intangible assets relate to the future performance of the assets acquired and
management’s judgement of the period over which economic benefit will be derived from the asset.
(II)
83
Impairment of goodwill and associates
Determining whether goodwill is impaired requires an estimation of the value-in-use of the cash-generating unit to
which the goodwill has been allocated. The value-in-use calculation for goodwill and associates requires the Group
to calculate the net present value of the future cash flows for which certain assumptions are required, including
management’s expectations of:
(IV) Property, plant and equipment
Property, plant and equipment represents a significant proportion of the total assets of the Group. Therefore, the
estimates and assumptions made to determine their carrying value and related depreciation are critical to the Group’s
financial position and performance. The charge in respect of periodic depreciation is derived after determining an
estimate of an asset’s expected useful life and the expected residual value at the end of its life. Increasing an asset’s
expected life or its residual value would result in a reduced depreciation charge in the consolidated income statement.
4. Segmental information
Information regarding the Group’s operating segments is set out below in accordance with IFRS 8 Operating Segments. IFRS
8 requires operating segments to be identified on the basis of internal reports that are regularly reviewed by the Group’s chief
operating decision maker and used to allocate resources to the segments and to assess their performance.
a)
Products and services from which reportable segments derive their revenues
The Group is engaged in a single line of business, being the supply of telecommunications services and related products.
The majority of the Group’s revenues, profits and assets relate to its operations in the UAE. Outside of the UAE, the
Group operates through its subsidiaries and associates in sixteen countries which are considered by the Group to be
one international operating segment. Revenue is attributed to an operating segment based on the location of the Group
company reporting the revenue. Inter-segment sales are charged at arms’ length prices.
b)
Segment revenues and results
Segment results represent operating profit earned by each segment without allocation of finance income, finance
costs and federal royalty. This is the measure reported to the Group’s Board of Directors (“Board of Directors”) and the
Executive Committee for the purposes of resource allocation and assessment of segment performance.
The Group’s share of results from associates and joint ventures has been allocated to the segments based on the
geographical location of the operations of the associate and joint venture investments. The allocation is in line with how
results from investments in associates and joint ventures are reported to the Board of Directors.
84
4. Segmental information (continued)
b)
c)
Segment revenues and results (continued)
The following is an analysis of the Group’s revenue and results by reportable segment:
UAE
AED’000
31 December 2011
Revenue
External sales
Inter-segment sales
Total revenue
Segment results
23,908,293
129,702
24,037,995
10,773,973
International
AED’000
8,333,580
169,425
8,503,005
(332,136)
Eliminations
AED’000
(299,127)
(299,127)
-
Federal royalty
Finance income
Finance costs
Profit before tax
Taxation
Profit for the year
Segment assets
For the purposes of monitoring segment performance and allocating resources between segments, the Board of
Directors and the Executive Committee monitors the tangible, intangible and financial assets attributable to each
segment. All assets are allocated to reportable segments. Assets used jointly by reportable segments are allocated on
the basis of the revenues earned by individual reportable segments.
Consolidated
AED’000
32,241,873
-
2010
AED’000
53,100,425
International
43,502,213
43,747,329
Total segment assets
96,827,786
96,847,754
(23,936,144)
(21,240,624)
72,891,642
75,607,130
Eliminations
32,241,873
10,441,837
(5,839,019)
696,057
(663,375)
4,635,500
(25,352)
4,610,148
UAE
2011
AED’000
53,325,573
Consolidated total assets
d)
Other segment information
UAE
Federal royalty
Finance income
Finance costs
Profit before tax
Taxation
Profit for the year
1,556,419
2,458,183
3,495,172
3,387,840
2,984,651
4,288,555
5,804,092
Staff costs
2011
AED’000
4,280,846
2010
AED’000
4,126,455
Direct cost of sales
5,950,554
4,970,927
Depreciation (Notes 10,11)
2,574,038
2,179,967
Amortisation (Note 9)
813,802
804,684
Regulatory expenses
922,251
899,186
Foreign exchange losses
216,430
192,564
Operating lease rentals
319,945
545,877
Repairs and maintenance
537,559
459,599
General financial expenses
1,291,401
1,111,838
Other operating expenses
3,057,618
3,254,428
19,964,444
18,545,525
5. Operating expenses and federal royalty
24,671,114
92,312
24,763,426
13,561,037
7,258,374
173,253
7,431,627
1,066,155
(265,565)
(265,565)
-
31,929,488
a)
Operating expenses (before federal royalty)
31,929,488
14,627,192
(7,630,750)
917,578
(384,836)
7,529,184
(100,406)
7,428,778
Total operating expenses (before federal royalty)
85
Additions to non-current assets
2011
2010
AED’000
AED’000
1,830,372
2,308,920
1,796,615
International
The UAE segment results include the impairment losses related to the Group’s goodwill in India (Note 9).
This is because the UAE segment assets include investments in Etisalat DB.
31 December 2010
Revenue
External sales
Inter-segment sales
Total revenue
Segment results
Depreciation and amortisation
2011
2010
AED’000
AED’000
1,591,225
1,428,232
86
5. Operating expenses and federal royalty (continued)
b)
8. Taxation
Federal royalty
In accordance with the Cabinet decision No. 558/1 for the year 1991, the Corporation was required to pay a federal royalty,
equivalent to 40% of its annual net profit before such federal royalty, to the UAE Government for use of federal facilities.
With effect from 1 June 1998, Cabinet decision No. 325/28M for 1998 increased the federal royalty payable to 50%.
The federal royalty has been treated as an operating expense in the consolidated income statement on the basis that
the expenses the Corporation would otherwise have had to incur for the use of the federal facilities would have been
classified as operating expenses.
Current tax expense/(credit)
Deferred tax (credit)/expense
a)
6. Finance income
Interest on bank deposits and held-to-maturity investment
2010
AED’000
507,192
Interest on loans to associates
295,414
315,384
42,204
95,002
696,057
917,578
Interest on bank overdrafts and loans
2011
AED’000
522,398
2010
AED’000
236,270
Interest payable on other borrowings
50,758
48,037
Unwinding of discount on payables related to investments and Licences
3,029
57,516
Other finance costs
87,190
43,013
663,375
384,836
664,094
405,481
(719)
(20,645)
663,375
384,836
Other finance income
7. Finance costs
Total borrowing costs
Less: amounts included in the cost of qualifying assets (Note 10)
All interest charges are generated on the Group’s financial liabilities measured at amortised cost. Borrowing costs included in
the cost of qualifying assets during the year arose on specific and general borrowing pools. Borrowing costs attributable to
general borrowing pools are calculated by applying a capitalisation rate of 10.7% (2010: 6%) to expenditure on such assets.
Borrowing costs have been capitalised in relation to loans by certain of the Group’s subsidiaries.
87
Profit before tax
Tax at the UAE corporation tax rate of 0% (2010: 0%)
Effect of different tax rates of subsidiaries operating in other Jurisdictions
Current tax expense/(credit) for the year
b)
2010
AED’000
(26,115)
(57,324)
126,521
25,352
100,406
Current tax
Corporate income tax is not levied in the UAE for telecommunication companies and accordingly the effective tax rate
for the Corporation is 0% (2010: 0%). The table below reconciles the difference between the expected tax expense of nil
(2010: nil) (based on the UAE effective tax rate) and the Group’s tax charge for the year.
Income earned on financial assets is as follows:
2011
AED’000
358,439
2011
AED’000
82,676
2011
AED’000
4,635,500
82,676
82,676
2010
AED’000
7,529,184
(26,115)
(26,115)
Deferred tax
The following represent the major deferred tax liabilities recognised by the Group and movements thereon during the
current and prior reporting period.
At 1 January 2010
Charge to the consolidated income statement
Exchange differences
At 31 December 2010
(Credit)/charge to the consolidated income statement
At 31 December 2011
Accelerated tax
depreciation
AED’000
538,464
84,271
107,514
730,249
(179,239)
(42,573)
508,437
Deferred tax on
overseas earnings
AED’000
42,250
42,250
121,915
164,165
Total
AED’000
538,464
126,521
107,514
772,499
(57,324)
(42,573)
672,602
At the 31 December 2011, the Group has unused tax losses of AED 1,599 million (2010: AED 5,622 million) available for
offset against future profits. A deferred tax asset has been recognised in respect of AED 1,090 million (2010: AED 296
million) of such losses. No deferred tax asset has been recognised in respect of the remaining AED 509 million (2010: AED
5,326 million) due to the unpredictability of future taxable profit streams. Included in unrecognised tax losses are losses
of AED 695 million (2010: AED 3,932 million) that will expire within the next three years, AED nil (2010: AED 717 million)
that will expire in the next four years. Other losses can be carried forward indefinitely.
88
9. Goodwill and other intangible assets
a)
Goodwill
AED’000
Other ntangible
assets
AED’000
Total
AED’000
3,127,914
(7,210)
3,120,704
16,499,676
259,339
(66,777)
(758,353)
15,933,885
19,627,590
259,339
(66,777)
(765,563)
19,054,589
-
2,849,202
804,684
(4,915)
(144,683)
3,504,288
2,849,202
804,684
(4,915)
(144,683)
3,504,288
Carrying amount
At 31 December 2010
3,120,704
12,429,597
15,550,301
Cost
At 1 January 2011
Additions
Disposals
At 31 December 2011
3,120,704
(7,121)
3,113,583
15,933,885
195,495
(55,352)
(672,705)
15,401,323
19,054,589
195,495
(55,352)
(679,826)
18,514,906
Accumulated amortisation and impairment
At 1 January 2011
Charge for the year
Impairment losses
Disposals
At 31 December 2011
1,240,690
1,240,690
3,504,288
813,802
975,465
(50,151)
(119,704)
5,123,700
3,504,288
813,802
2,216,155
(50,151)
(119,704)
6,364,390
Carrying amount
At 31 December 2011
1,872,893
10,277,623
12,150,516
Cost
At 1 January 2010
Additions
Disposals
At 31 December 2010
Accumulated amortisation
At 1 January 2010
Charge for the year
Disposals
At 31 December 2010
Other intangible assets include licences, software and IRUs having net book values of AED 9,451 million (2010: AED 11,624
million), AED 367 million (2010: AED 414 million), and AED 459 million (2010: AED 391 million), respectively.
Financial guarantees are secured against licenses with a net book value of AED nil ( 2010: AED 250 million).
These licenses were fully impaired during 2011.
89
Cash generating units
Goodwill acquired in a business combination is allocated, at acquisition, to the CGUs that are expected to benefit from that
business combination. The Group tests goodwill annually for impairment or more frequently if there are indications that
goodwill might be impaired. The carrying amount of goodwill (all relating to operations within the Group’s International
reportable segment) is allocated to the following CGUs:
Atlantique Telecom, S.A. (“AT”)
Etisalat DB Telecom Private Limited (“Etisalat DB”)
Canar Telecommunications Co. Limited
Etisalat Misr (Etisalat) S.A.E
Zanzibar Telecom Limited (“Zantel”)
Etisalat Lanka (Pvt) Limited (“Etisalat Lanka”)
2011
AED’000
1,253,530
337,130
31,215
44,896
206,122
1,872,893
2010
AED’000
1,256,802
1,243,337
337,130
32,417
44,896
206,122
3,120,704
As a result of the Indian Supreme Court ruling on 2 February 2012 relating to the cancellation of 2G licenses issued from
2008 onwards and as a consequence of the significant uncertainties surrounding its Indian operation, Etisalat management
recognised an impairment charge of AED 3,044 million before Federal royalty against the full carrying value of goodwill
of AED 1,227 million and the Indian operations - “Etisalat DB” net assets comprising of “licenses and other intangibles”
amounting to AED 989 million and “plant and equipment” of AED 828 million (Note 10). The Corporation’s share of this
charge after Federal royalty amounts to AED 1,020 million.
The Corporation continues to assess its strategic options concerning its operations in India.
b)
Key assumptions for the value in use calculations
With the exception of Etisalat DB, the recoverable amount of all of the Group’s CGUs has been determined with respect
to their value in use. The key assumptions for the value in use calculations are those regarding the long term forecast
cash flows, discount rates and capital expenditure.
(i) Long term cash flows
The Group prepares cash flow forecasts derived from the most recent annual business plan approved by
management for each location for the next five years. The business plans take into account local market
considerations such as the revenues and costs associated with future customer growth, the impact of local market
competition and consideration of the local macro-economic and political trading environment. These cash flows are
sometimes extrapolated beyond this period, up to a maximum of ten years. This rate does not exceed the average
long-term growth rate for the relevant markets and it ranges between 2% to 8.6% (2010: 2% to 8.6%).
(ii) Discount rates
The discount rates applied to the cash flows of each of the Group’s operations are based on an external third party
study conducted by the Group’s bankers. The study utilised market data and information from comparable listed
mobile telecommunications companies and where available and appropriate, across a specific territory.
The pre-tax discount rates use a forward looking equity market risk premium and ranges between 11.8% to 17.9%
(2010: 13.1% to 19%).
(iii) Capital expenditure
The cash flow forecasts for capital expenditure are based on past experience and include the ongoing capital
expenditure required to roll out networks in emerging markets, to provide enhanced voice and data products and
services and to meet the population coverage requirements of certain licences of the Group. Capital expenditure
includes cash outflows for the purchase of property, plant and equipment and computer software.
90
10. Property, plant and equipment
Buildings
AED’000
Plant and
equipment
AED’000
Motor vehicles,
computers,
furniture
AED’000
3,370,034
264,014
120,830
(42,396)
(7,313)
3,705,169
21,556,599
1,556,784
1,857,382
(289,963)
(242,654)
24,438,148
2,054,978
326,901
281,638
(62,015)
(82,648)
2,518,854
6,191,111
3,661,068
(2,403,034)
12,595
7,461,740
33,172,722
5,544,753
120,830
(394,374)
(320,020)
38,123,911
Accumulated depreciation and impairment
At 1 January 2010
1,874,643
Charge for the year
157,385
Transfer - investment property
12,060
Impairment losses
Disposals
(339)
(1,784)
At 31 December 2010
2,041,965
12,306,836
1,697,618
(243,272)
(55,270)
13,705,912
1,405,857
318,844
(62,015)
(21,844)
1,640,842
59,833
59,833
15,587,336
2,173,847
12,060
59,833
(305,626)
(78,898)
17,448,552
Cost
At 1 January 2010
Additions
Transfers
Disposals
At 31 December 2010
Assets under
construction
AED’000
Total
AED’000
Carrying amount
At 31 December 2010
1,663,204
10,732,236
878,012
7,401,907
20,675,359
Cost
At 1 January 2011
Additions
Transfers
Disposals
At 31 December 2011
3,705,169
15,298
28,680
3,031
(1,192)
(15,957)
3,735,029
24,438,148
427,830
3,251,847
(630,874)
(421,598)
27,065,353
2,518,854
97,495
311,040
(35,825)
(82,753)
2,808,811
7,461,740
3,552,437
(3,591,567)
(275,858)
7,146,752
38,123,911
4,093,060
3,031
(667,891)
(796,166)
40,755,945
Accumulated depreciation and impairment
At 1 January 2011
2,041,965
Charge for the year
166,890
519
Impairment losses (Note 9)
Disposals
(697)
(1,955)
At 31 December 2011
2,206,722
Carrying amount
At 31 December 2011
91
The carrying amount of the Group’s buildings includes a nominal amount of AED 1 (2010: AED 1) in relation to land granted
to the Group by the Government. There are no contingencies attached to this grant and as such no additional amounts have
been included in the consolidated income statement or the consolidated statement of financial position in relation to this.
1,528,307
An amount of AED 0.72 million (2010: AED 20.6 million) is included in property, plant and equipment on account of
capitalisation of borrowing costs for the year.
Borrowings are secured against property, plant and equipment with a net book value of AED 3,175 million (2010: AED 3,910 million).
Assets under construction include multiplex equipment, line plant, exchange and network equipment.
11. Investment property
Investment property, which is property held to earn rentals and/or for capital appreciation, is stated at depreciated cost and
included separately under non-current assets in the consolidated statement of financial position.
2011
AED’000
2010
AED’000
Cost
At 1 January
Additions
Transfer to property, plant and equipment
At 31 December
54,770
430
(3,031)
52,169
175,600
(120,830)
54,770
Accumulated depreciation
At 1 January
Charge for the year
Transfer to property, plant and equipment
At 31 December
Carrying amount at 31 December
Fair value at 31 December
6,860
3,053
(519)
9,394
42,775
59,720
12,800
6,120
(12,060)
6,860
47,910
63,233
The fair value of the Group’s investment property at 31 December 2011 has been arrived at on the basis of a valuation carried
out by internal valuers that are not independent from the Corporation.
The property rental income earned by the Group from its investment property, all of which is leased out under operating
leases, amounted to AED 16.2 million (2010: AED 15.0 million).
13,705,912
2,006,522
827,911
(555,241)
(96,775)
15,888,329
1,640,842
397,573
(14,811)
(36,538)
1,987,066
59,833
59,833
17,448,552
2,570,985
519
827,911
(570,749)
(135,268)
20,141,950
11,177,024
821,745
7,086,919
20,613,995
Direct operating expenses arising on the investment property in the period amounted to AED 1.2 million
(2010: AED 5.2 million).
92
12. Subsidiaries
b)
Movement in investment in associates
The Group’s principal subsidiaries at 31 December 2011 and 31 December 2010 were as follows:
Name
Emirates Telecommunications and
Marine Services FZE
Emirates Cable TV and Multimedia LLC
Etisalat International Pakistan LLC
E-Marine PJSC
EDCH FZE
Etisalat Services FZE
Etisalat Services Holding LLC
Etisalat Software Solutions (Private)
Limited
Zanzibar Telecom Limited
Canar Telecommunications Co. Limited
Etisalat International Nigeria Limited
Etisalat International Indonesia Limited
Etisalat Afghanistan
Etisalat DB Telecom Private Limited
Etisalat Misr S.A.E
Atlantique Telecom S.A.
Etisalat Benin
Etisalat Lanka (Pvt.) Limited
100%
90%
Net book amount at 1 January 2010
Dividends
Share of results
Loss on dilution of shareholding
Reclassification of loan
AED’000
15,622,490
(335,026)
1,385,073
(149,866)
(451,639)
100%
100%
100%
100%
100%
Net book amount at 31 December 2010
Share of results
Dividends
Tax on dividend
Net book amount at 31 December 2011
16,071,032
1,572,204
(743,625)
11,766
16,911,377
Country of
incorporation
Jebel Ali Free Zone, Dubai
Principal
activity
Telecommunications services
Percentage
shareholding
100%
UAE
UAE
Cable television services
Holds investment in Pakistan
Telecommunication Co. Ltd
Submarine cable activities
Data management services
Management services
Infrastructure services
Technology solutions
UAE
Abu Dhabi
India
Tanzania
Republic of Sudan
Afghanistan
India
Egypt
Cote d’Ivoire
Benin
Sri Lanka
Holds investment in Emerging Market
Telecommunications Services B.V.
(Netherlands)
Holds investment in PT XL Axiata TBK
65%
89%
100%
Share of losses from EMTS amounting to AED 357 million (2010: AED 136 million) have been offset against loans due
from associates as the investment in associate has already been fully written down by prior year losses.
The investment in associates include an amount of AED 2,937 million related to PTCL for which the consideration has
not been paid and is included in the payables related to investments as disclosed in Note 23.
100%
100%
44.7%*
66%
100%
100%
100%
c)
Aggregated amounts relating to associates
Total assets
Total liabilities
Net assets of associates
Total revenue
Total results of associates
* The Group accounts for the investment in Etisalat DB Telecom Private Limited as a subsidiary as it exercises control.
2011
AED’000
68,084,706
(41,499,143)
26,585,563
34,111,315
4,815,665
2010
AED’000
62,600,678
(38,099,857)
24,500,821
28,770,765
4,630,615
13. Investment in associates
a)
The aggregation above comprises the results and financial position of all associates as at 31 December 2011, with the
exception of PTCL whose results and financial position for the year ended 30 June 2011 have been included.
Associates at 31 December 2011
Name
Pakistan Telecommunication
Company Limited (“PTCL”)
Etihad Etisalat Company (“Mobily”)
Thuraya Telecommunications
Company PJSC (“Thuraya”)
PT XL Axiata Tbk (“PEPT”)
Emerging Markets
Telecommunications Services
Limited * (“EMTS Nigeria”)
Country of
incorporation
Pakistan
Principal
activity
Percentage
shareholding
26%
Saudi Arabia
UAE
Satellite communication services
27%
28%
Indonesia
Nigeria
13%
40%
d)
Market value of associates
The shares of two of the Group’s associates are quoted on public stock markets, the market value of the Group’s
shareholding is as follows:
Etihad Etisalat Company
PT XL Axiata TBK
2011
AED’000
9,884,470
2,032,833
2010
AED’000
10,407,538
2,400,895
* Although the shares of PEPT are listed, trading in the shares is minimal, therefore in management’s view, the market value does not represent the fair value to the Group.
* The subsidiary of Emerging Markets Telecommunications Services B.V. (“EMTS”) incorporated in Netherlands
93
94
13. Investment in associates (continued)
e)
c)
Significant influence judgements
(i) Pakistan Telecommunication Company Limited
The Corporation, through its majority owned subsidiary Etisalat International Pakistan LLC (“EIP”), owns the entire
1.326 billion Class B shares of PTCL. These Class B shares represent 26% of PTCL’s issued capital and, in accordance
with PTCL’s Articles of Association, provide the Corporation with 53% of the voting rights. Under the terms of the
Shareholders Agreement between EIP and the Government of Pakistan (“GOP”), EIP has the right to appoint five
of the nine members of the Board of Directors of PTCL in addition to the appointment of certain key management
personnel. However, management believes that there are certain control impediments, including but not limited to
restrictions on the Corporation’s financial and operating decision making ability, and because of these, PTCL has
been accounted for as an associate using the equity method. Management believes that some or all of these control
impediments may be alleviated in the future which may result in the consolidation of PTCL.
(ii) PT XL Axiata TBK
The Corporation holds 13.3% (2010: 13.3%) of the paid-up capital of PEPT. The Corporation exercises significant
influence over PEPT by virtue of its representation on the Board of Commissioners and accordingly, it is accounted
for as an associate.
The Group has not identified any contingent liabilities or capital commitments in relation to its interest in
associates, nor do the associates themselves have any contingent liabilities or capital commitments for which the
Group is contingently liable.
f)
Joint ventures at 31 December 2011
Name
Ubiquitous Telecommunications
Technology LLC
Smart Technology Services
DWC – LLC
b)
Group’s share of current assets
Group’s share of non-current assets
Group’s share of current liabilities
Group’s share of non-current liabilities
Group’s share of net assets in joint ventures Ventures
Group’s share of income in joint ventures
Group’s share of expenditure in joint ventures Ventures
Group’s share of results in joint ventures
Country of
incorporation
UAE
Principal
activity
Installation and management
of network systems
DWC Free Zone, Dubai, UAE ICT services
Percentage
shareholding
50%
50%
Movement in investment in joint ventures
Net book amount at 1 January
Share of results
Net book amount at 31 December
2011
AED’000
94,037
(5,966)
88,071
2010
AED’000
99,921
(5,884)
94,037
2011
AED’000
23,644
75,769
(11,289)
(53)
88,071
2010
AED’000
31,570
73,969
(11,502)
94,037
12,689
(18,655)
(5,966)
26,642
(32,526)
(5,884)
The Group has not identified any contingent liabilities or capital commitments in relation to its interest in joint ventures,
nor do the joint ventures themselves have any contingent liabilities or capital commitments for which the Group is
contingently liable.
15. Other investments
Other investments comprise of the following, all of which are classified as available for sale, with the exception of the Sukuk,
which is classified as held-to-maturity investment.
Key assumptions for the value in use calculation
The key assumptions for the value in use calculations for investment in associates are as disclosed in Note 9.
14. Investment in joint ventures
a)
Aggregated amounts relating to joint ventures
At 1 January 2010
Additions
Investment revaluation
At 31 December 2010
Additions
Investment revaluation
At 31 December 2011
Quoted equity
investments
AED’000
345,995
341
346,336
(59,560)
286,776
Un-quoted equity
investments
AED’000
55,662
23,292
78,954
541
(1,465)
78,030
Sukuk
AED’000
91,850
91,850
91,850
Total
AED’000
493,507
23,292
341
517,140
541
(59,560)
(1,465)
456,656
Quoted equity investments represent investments in listed equity securities that present the Group with opportunity for
return through dividend income and capital growth. These shares are not held for trading. The fair values of these equity
securities are derived from quoted prices in active markets for identical assets, which, in accordance with the fair value
hierarchy within IFRS 7 Financial Instruments: Disclosure, represent Level 1 fair values.
Non-quoted equity investments include those made by AT. amounting to AED 60.6 million (2010: AED 61.5 million).
These investments are carried at cost as they are unquoted equity instruments that do not have a quoted market price
in an active market and whose fair value cannot be reliably measured.
The Sukuk is a bond structured to conform with the principles of Islamic Sharia law. At 31 December 2011, the market value of
this investment was AED 90 million (2010: AED 84 million).
95
96
16. Related party transactions and balances
(ii) Thuraya Telecommunications Company PJSC
The Corporation provides a primary gateway facility to Thuraya including maintenance and support services.
The Corporation receives annual income from Thuraya in respect of these services.
Transactions between the Corporation and its subsidiaries, which are related parties, have been eliminated on consolidation
and are not disclosed in this note. Transactions between the Group and its associates are disclosed below.
a)
(iii) Pakistan Telecommunication Company Limited
Pursuant to the shareholders agreement entered into between Etisalat International Pakistan and the Government
of Pakistan dated 12 April 2006, the Corporation entered into an agreement for the provision of technical services
and know-how (“the PTCL Agreement”) with PTCL with effect from 10 October 2006. Under the terms of the
PTCL Agreement, the Corporation is entitled to an annual service fee of 3.5% of the gross consolidated revenue of
PTCL for that year. Initially the Agreement was valid for a period of 5 years and limits the fee to US$ 50 million per
annum and has been renewed with the same terms and conditions.
Federal Government and state controlled entities
As stated in Note 1, in accordance with Federal Law No. 267/10 for 2009, the Federal Government of the UAE
transferred its 60% holding in the Corporation to the Emirates Investment Authority with effect from 1 January 2008,
which is ultimately controlled by the UAE Federal Government. The Group provides telecommunication services to the
Federal Government (including Ministries and local bodies). These transactions are at normal commercial terms. The
credit period allowed to Government customers ranges from 90 to 120 days. At 31 December 2011, trade receivables
include an amount of AED 680 million (2010: AED 297 million), receivable from Federal Ministries and local bodies.
See Note 5 for disclosure of the royalty payable to the Federal Government of the UAE.
(iv) Emerging Markets Telecommunications Services B.V.
Amounts invoiced by the Corporation relate to annual management fees, fees for staff secondments and
other services.
In accordance with IAS 24 (revised 2009) Related Party Disclosures the Group has elected not to disclose transactions
with the UAE Federal Government and other entities over which the Federal Government exerts control, joint control
or significant influence. The nature of the transactions that the Group has with such related parties is the provision of
telecommunication services.
b)
In 2010, the Corporation advanced a loan of AED 1.7 billion to EMTS B.V. EMTS B.V. has advanced a loan to its
subsidiary EMTS Nigeria. EMTS B.V.’s loan to EMTS Nigeria was subordinated in 2011 as a result of an external
borrowing arrangement entered into by EMTS Nigeria.
Joint ventures and associates
Associates
2011
2010
AED million
AED million
Trading transactions
Telecommunication services – sales
Telecommunication services – purchases
Management and other services
Net amount due from/(to) related parties
Loans to related parties
Interest income
Amount due from related party
200.2
205.0
392.9
397.0
220.1
383.5
421.4
246.3
493.6
3,891.0
315.4
3,344.9
Joint ventures
2011
2010
AED million
AED million
4.3
(3.8)
-
2.1
1.1
-
Sales to related parties comprise management fees and the provision of telecommunication products and
services (primarily voice traffic and leased circuits) by the Group. Purchases relate exclusively to the provision of
telecommunication products and services by associates to the Group.
The principal management and other services provided to the Group’s associates are set out below:
(i) Etihad Etisalat Company
Pursuant to the Communications and Information Technology Commission’s (CITC) licensing requirements, EEC
(then under incorporation) entered into a management agreement (“the Agreement”) with the Corporation as
its operator from 23 December 2004. Amounts invoiced by the Corporation relate to annual management fees,
fees for staff secondments and other services provided under the Agreement. The term of the Agreement is for a
period of seven years and can be automatically renewed for successive periods of five years unless the Corporation
serves a 12 month notice of termination or EEC serves a 6 month notice of termination prior to the expiry of the
applicable period.
c)
Remuneration of key management personnel
The remuneration of the Board of Directors, who are the key management personnel of the Group, is set out below
in aggregate for the category specified in IAS 24 Related Party Disclosures.
Short-term benefits
2011
AED’000
19,626
2010
AED’000
28,261
2011
AED’000
2010
AED’000
13,294
13,294
(621)
12,673
13,294
13,294
26,588
(1,835)
24,753
12,673
12,673
12,080
12,673
24,753
17. Finance lease receivables
Amounts receivable under finance leases:
Minimum lease payments:
Within one year
In the second to fifth years inclusive
Less: unearned finance income
Present value of minimum lease payments receivable
Present value of minimum lease payments:
Within one year (current)
In the second to fifth years inclusive (non-current)
The Group holds a finance lease arrangement in relation to building and installations in the UAE leased out to Thuraya, an
associate of the Group.
The interest rate inherent in the leases is fixed at the contract date for all of the lease term. The average effective interest rate
contracted approximates to 4.9% per annum (2010: 4.9% per annum). The directors consider that the carrying amount of the
Group’s finance lease receivables approximates to their fair value.
97
98
18. Inventories
Subscriber equipment
Maintenance and consumables
2011
AED’000
293,736
51,483
345,219
2010
AED’000
232,810
83,451
316,261
2011
AED’000
5,416,944
(1,257,814)
4,159,130
2,058,779
421,061
584,576
1,509,169
8,732,715
2010
AED’000
5,287,329
(1,217,695)
4,069,634
2,147,034
303,338
639,507
1,288,569
8,448,082
The Group’s credit period ranges between 30 and 120 days (2010: 30 and 120 days).
The Group provides for all past due trade receivables and as such there were no past due receivables not considered for
impairment as at 31 December 2011. Out of the past due receivables of AED 2,842 million (2010: AED 3,043 million), the Group
provided for an amount of AED 1,258 million (2010: AED 1,218 million) based on its assessment of the credit quality of the
amounts due. It was assessed that a portion of the past due receivables is expected to be recovered.
2011
AED’000
2010
AED’000
1,217,695
865,995
40,119
351,700
1,257,814
1,217,695
Movement in allowance for doubtful debts
Opening balance as at 1 January
Net increase in allowance for doubtful debts
Closing balance as at 31 December
Interest is earned on these deposits at prevailing market rates. Cash and cash equivalents include an amount of AED 2,089
million (2010: AED 2,633 million) representing bank and cash balances of the Corporation’s subsidiaries maintained overseas
of which AED 602 million is restricted.
21. Trade and other payables
19. Trade and other receivables
Amount receivable for the services rendered
Allowance for doubtful debts
Net trade receivables
Amounts due from other telecommunication administrations
Prepayments
Accrued income
Other receivables
Cash and cash equivalents comprise cash and short-term bank deposits with an original maturity of three months or less.
These are denominated primarily in UAE Dirham, with financial institutions and banks. The carrying amount of these assets
approximates to their fair value.
No interest is charged on the receivables. With respect to the amount receivable from the services rendered the Group holds
AED 317 million (2010: AED 344 million) of collateral in the form of cash deposits from customers.
Included within current liabilities:
Federal royalty
Trade payables
Amounts due to other telecommunication administrations
Deferred revenue
Other payables
2011
AED’000
2010
AED’000
5,839,019
2,693,491
1,720,034
1,255,586
6,436,467
17,944,597
7,630,750
2,441,976
1,657,874
1,216,437
7,131,177
20,078,214
554,327
97,475
651,802
1,046,699
43,070
1,089,769
Included within non-current liabilities:
Trade payables
Other payables
Federal royalty for the year ended 31 December 2011 is to be paid on a monthly basis to the Ministry of Finance and Industry,
UAE after the first quarter of 2012.
“Amounts due to other telecommunication administrations” include interconnect balances with related parties.
22. Borrowings
The carrying value and estimated fair value of the Group’s bank and other borrowings (measured at amortised cost) are as follows:
Fair value
2011
2010
AED’000
AED’000
Bank borrowings
Bank overdrafts
Bank loans
Carrying value
2011
2010
AED’000
AED’000
91,584
5,192,847
85,347
4,608,105
91,584
5,361,208
85,347
4,292,689
277,074
374,327
8,507
5,944,339
593,740
896,366
8,754
6,192,312
277,074
374,327
8,507
6,112,700
583,311
6,696,011
547,722
873,277
8,453
5,807,488
592,182
6,399,670
“Amounts due from other telecommunication administrations” include interconnect balances with related parties.
20. Cash and cash equivalents
2011
AED’000
9,971,647
2010
AED’000
10,276,744
Other borrowings
Loans from non-controlling interests
Vendor financing
Other
Advances from non-controlling interests
The fair values of the Group’s bank and other borrowings are calculated using discounted cash flows using an appropriate
discount factor for similar financial instruments that includes credit risk.
99
100
22. Borrowings (continued)
a)
Advances from non-controlling interests represent advances paid by the minority shareholder of Etisalat International
Pakistan LLC towards the Group’s acquisition of its 26% stake in PTCL, net of repayments. The amount is interest free, does
not have any fixed repayment terms, and is not repayable within 12 months of the reporting date and accordingly, the full
amount is carried in non-current liabilities. The fair value of advances from non-controlling interests is not equivalent to its
carrying value due to the fact that it is non-interest bearing. However, as there is no repayment date, a fair value cannot be
reasonably determined.
Disclosed as:
2011
AED’000
2,435,092
4,260,919
6,696,011
Due for settlement within 12 months
Due for settlement after 12 months
2010
AED’000
1,195,071
5,204,599
6,399,670
External borrowings of AED 5,579 million (2010: AED 3,910 million) are secured by property, plant and equipment.
The terms and conditions of the Group’s bank and other borrowings are as follows:
Year of
Currency maturity
Secured bank loan
EGP
2012-2016
Secured bank loan
USD
2012-2015
Secured bank loan
INR
2012
Secured bank loan
EUR
2012
Advances from non-controlling interests USD
N/A
Secured vendor financing
USD
2012-2014
Secured bank loan
USD
2012-2014
Unsecured loans from minority partners EGP
2012-2015
Secured bank loan
EUR
2012-2015
Unsecured bank loan
USD
2013
Secured bank loan
USD
2012-2017
Unsecured bank overdrafts
USD
2012
Secured bank loans
EUR
2012-2014
LKR
2012
Unsecured loans from other
telecoms operators
EGP
2012
EUR
2012
Secured bank loan
USD
2012
Other
Various Various
Secured bank loan
EGP
2011
Secured bank loan
USD
2011
Secured vendor financing
USD
2012
Secured bank loan
EGP
2011
Unsecured bank overdraft
USD
2011
101
Interest
rate type
Variable
Variable
Fixed
Variable
N/A
Fixed
Variable
Fixed
Variable
Variable
Variable
Fixed
Fixed
Variable
Fixed
Fixed
Variable
Various
Variable
Variable
Variable
Fixed
Variable
Carrying value
Nominal
2011
2010
interest rate
AED’000
AED’000
Mid Corridor +1.4% 1,793,897
LIBOR +2.9%
1,096,134
14.3%
977,869
630,871
EURIBOR +8.7%
593,738
607,628
N/A
583,311
592,182
5.0%
374,263
462,642
LIBOR +4.8%
314,039
231,374
10.0%
277,074
547,722
EURIBOR +4.9%
227,290
LIBOR +1.3%
174,003
LIBOR +6.2%
127,232
64,072
3.3% - 4.8%
54,253
71,957
9.0% - 11.0%
51,362
102,362
LIBOR +1.0%
26,821
8.0%
10.0% - 14.5%
LIBOR +5.5%
Various
Mid Corridor +0.5%
LIBOR +0.8%
LIBOR +2.1%
10.0%
LIBOR +4.5%
8,506
7,958
5,643
2,618
6,696,011
8,284
10,546
11,933
1,212
1,519,510
1,104,805
410,635
19,091
2,844
6,399,670
b)
Interest rates
The weighted average interest rate paid during the year on bank and other borrowings is set out below:
Bank borrowings
2011
8.9%
2010
7.1%
Other borrowings
7.1%
4.1%
Available facilities
At 31 December 2011, the Group had available AED 2,101 million (2010: AED 1,149 million) of undrawn committed
borrowing facilities in respect of which all conditions precedent had been met.
23. Payables related to investments and licence
Current
AED’000
Non-current
AED’000
Total
AED’000
31 December 2011
Investments
Atlantique
Licence
Republic of Benin
2,936,654
11,022
-
2,936,654
11,022
19,564
2,967,240
-
19,564
2,967,240
31 December 2010
Investment
Licence
Republic of Benin
2,936,654
-
2,936,654
19,363
2,956,017
19,841
19,841
39,204
2,975,858
According to the terms of the share purchase agreement between Etisalat International Pakistan LLC and the Government of
Pakistan (“GOP”) payments of AED 6,612 million (2010: AED 6,612 million) have been made to GOP with the balance of AED
2,937 million (2010: AED 2,937 million) to be paid. The amounts payable are being withheld pending completion of certain
conditions in the share purchase agreement related to the transfer of certain assets to PTCL.
All amounts payable on acquisitions are financial liabilities measured at amortised cost and are mostly denominated in either
USD or AED and thus do not result in significant exchange rate risk.
102
24. Finance lease obligations
Minimum lease payments
2011
2010
AED’000
AED’000
Amounts payable under finance leases
Within one year
After five years
Less: future finance charges
Present value of lease obligations
88,720
61,020
149,740
(35,473)
114,267
Disclosed as:
Amounts due within 12 months
Amounts due after 12 months
55,615
199,975
45,130
300,720
(61,858)
238,862
Present value of
minimum lease payments
2011
2010
AED’000
AED’000
59,261
55,006
114,267
107,277
129,778
1,807
238,862
66,725
172,137
238,862
It is the Group’s policy to lease certain of its plant and machinery under finance leases. The average lease term is 1 year
(2010: 2 years). For the year ended 31 December 2011, the average effective borrowing rate was 12.7% (2010: 12.6%).
The fair value of the Group’s lease obligations is approximately equal to their carrying value.
25. Provisions
At 1 January 2010
Additional provision in the year
Utilisation of provision
Release of provision
Reclassification
Unwinding of discount
At 31 December 2010
Additional provision in the year
Utilisation of provision
Reclassification from accruals
Unwinding of discount
At 31 December 2011
Included in current liabilities
Included in non-current liabilities
103
Retirement
provision
AED’000
1,725
(1,725)
-
“Other” includes provisions relating to certain indirect tax liabilities and other regulatory related items arising from certain
Group’s overseas subsidiaries.
26. Financial instruments
Details of the significant accounting policies and methods adopted (including the criteria for recognition, the basis of
measurement and the bases of recognition of income and expenses) for each class of financial asset and financial liability are
disclosed in Note 2.
Capital management
The Group’s capital structure is as follows:
59,261
55,006
114,267
Asset retirement
obligations
AED’000
39,891
19,684
(8)
484
60,051
5,164
10,518
367
(2,050)
74,050
Asset retirement obligations relate to certain assets held by certain Group’s overseas subsidiaries that will require restoration
at a future date that has been approximated to be equal to the end of the useful economic life of the assets. There are no
expected reimbursements for these amounts.
Other
AED’000
58,364
123,380
28,710
210,454
580,986
(250,532)
(150,442)
514,067
692
(20,875)
884,350
Total
AED’000
99,980
143,064
(8)
(1,725)
28,710
484
270,505
586,150
(240,014)
(150,442)
514,067
1,059
(22,925)
958,400
2011
AED’000
778,494
179,906
958,400
2010
AED’000
181,961
88,544
270,505
Bank borrowings
Other borrowings
Net funds
Total equity
Capital
2011
AED’000
(5,452,792)
(1,243,219)
(114,267)
9,971,647
3,161,369
(41,703,851)
(38,542,482)
2010
AED’000
(4,378,036)
(2,021,634)
(238,862)
10,276,744
3,638,212
(42,565,325)
(38,927,113)
The capital structure of the Group consists of bank and other borrowings, finance lease obligations, cash and cash equivalents
and total equity comprising share capital, reserves and retained earnings.
The Group monitors the balance between equity and debt financing and establishes internal limits on the maximum amount
of debt relative to earnings. The limits are assessed, and revised as deemed appropriate, based on various considerations
including the anticipated funding requirements of the Group and the weighted average cost of capital. The overall objective is
to maximise returns to its shareholders through the optimisation of the net debt and equity balance. The Group is not subject
to any externally imposed capital requirements.
Categories of financial instruments
The Group’s financial assets and liabilities consist of the following at 31 December 2011:
Financial assets
Loans and receivables, held at amortised cost:
Loans to/due from associates and joint ventures
Trade and other receivables, excluding prepayments
Available-for-sale financial assets
Held-to-maturity investments
2011
AED’000
2010
AED’000
3,262,184
12,673
8,311,654
11,586,511
364,806
91,850
9,971,647
22,014,814
3,224,046
24,753
8,144,744
11,393,543
425,290
91,850
10,276,744
22,187,427
104
26. Financial instruments (continued)
Categories of financial instruments (continued)
Financial liabilities
Other financial liabilities held at amortised cost:
Trade and other payables, excluding deferred revenue
Borrowings
Payables related to investments and licences
Derivative financial instruments
2011
AED’000
2010
AED’000
17,340,813
6,696,011
2,967,240
114,267
354,861
27,473,192
19,951,546
6,399,670
2,975,858
238,862
382,145
29,948,081
Derivative financial instruments represent the fair value of a written put option over the equity of an overseas subsidiary.
Financial risk management objectives
The Group’s corporate finance function has overall responsibility for monitoring the domestic and international financial
markets and managing the financial risks relating to the operations of the Group. Any significant decisions about whether
to invest, borrow funds or purchase derivative financial instruments are approved by either the Executive Committee or the
Board of Directors of either the Corporation or of the individual subsidiary. The Group’s risk includes market risk, credit risk
and liquidity risk.
Market risk
The Group’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates, interest rates and
price risks on equity investments. From time to time, the Group will use derivative financial instruments to hedge its exposure
to currency risk. There has been no change to the Group’s exposure to market risks or the manner in which it manages and
measures the risk during the year.
Foreign currency risk
The Group has limited transactional exposure to exchange rate risk as it generally enters into contracts in the functional
currency of the entity. These currencies include Indian Rupee, Nigerian Naira, Egyptian Pounds, Pakistani Rupee, Indonesian
Rupiah and CFA Francs. The Group also enters into contracts in USD and in Euros and as these currencies are pegged to AED
and CFA respectively it results in limited exposure.
At 31 December 2011, the Group has financial assets and liabilities in its Egyptian and Indian subsidiaries that were in USD
and other limited financial liabilities in Tanzania that are in currencies other than its respective functional currency. In
instances where the Group has a foreign currency transactional exposure, it considers whether to purchase derivative financial
instruments to manage the exposure and reassess this conclusion based on the level of exposure. The Group’s exposure to
transactional exchange rate risk has not historically resulted in material impacts on profitability.
In addition to transactional foreign currency exposure, the Group is exposed to risk upon the translation of the Group’s foreign
subsidiaries into AED. The Group recognises the impact of the translation as a movement in equity.
Foreign currency sensitivity
The following table presents the Group’s sensitivity to a 10 per cent change in the Dirham against the Egyptian Pound, the
Indian Rupee and the Euro. These three currencies account for a significant portion of the impact of net profit, which is
considered to materially occur through cash and borrowings within the Group’s financial statements in respect of subsidiaries
and associates whose functional currency is not the Dirham. The impact has been determined by assuming a strengthening in
the foreign currency exchange of 10% upon closing foreign exchange rates. A positive number indicates an increase in the net
cash and borrowings balance if the AED/USD were to strengthen against the foreign currency.
105
Increase in profit/(loss) for the year and increase/(decrease) in equity
Egyptian pounds
Indian Rupees
Euros
2011
AED’000
2010
AED’000
136,214
33,106
51,160
323,659
169,310
95,723
Interest rate risk
The Group is exposed to interest rate risk as entities in the Group borrow funds at both fixed and floating interest rates. The
Group monitors the market interest rates in comparison to its current borrowing rates and determines whether or not it believes
it should take action related to the current interest rates. This includes a consideration of the current cost of borrowing, the
projected future interest rates, the cost and availability of derivate financial instruments that could be used to alter the nature
of the interest and the term of the debt and, if applicable, the period for which the interest rate is currently fixed.
Interest rate sensitivity
Based on the borrowings outstanding at 31 December 2011, if interest rates had been 2% higher or lower during the year and all
other variables were held constant, the Group’s net profit and equity would have decreased or increased by AED 87 million (2010:
AED 79.9 million). This impact is primarily attributable to the Group’s exposure to interest rates on its variable rate borrowings.
The Group’s sensitivity to interest rate has not changed significantly during the year.
Other price risk
The Group is exposed to equity price risks arising from its equity investments. Equity investments are held for strategic rather
than trading purposes. The Group does not actively trade these investments. See Note 15 for further details on the carrying
value of these investments.
The Group’s sensitivity to other prices has not changed significantly during the year.
Credit risk management
Credit risk refers to the risk that the counterparty will default on its contractual obligations resulting in financial loss to
the Group and arises principally from the Group’s bank balances and trade and other receivables. The Group has adopted a
policy of only dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means
of mitigating the risk of financial loss from defaults. The Group’s exposure and the credit ratings of its counterparties are
monitored and the aggregate value of transactions concluded is spread amongst approved counterparties.
For its bank balance, the Group considers various factors in determining with which banks to invest its money including
whether the bank is owned by and/or has received government support, the rating of the bank by rating agencies and the level
of security by way of governmental deposit guarantees. The assessment of the banks and the amount to be invested in each
bank is assessed annually or when there are significant changes in the marketplace.
At 31 December 2011, the Group’s bank balances were invested 79% (2010: 74%) in the UAE and 21 % (2010: 26%) outside of the
UAE. Of the amounts in the UAE, an aggregate of AED 1.7 billion (2010: AED 1.4 billion) was with banks rated A+ by Fitch, AED 1.3
billion (2010: AED 1.8 billion) with banks rated A by Fitch and AED nil (2010: AED 750 million) rated A- by Standard and Poor’s.
In relation to its trade receivables, the trade receivables consist of a large number of customers, spread across diverse industries
and geographical areas. Ongoing credit evaluation is performed on the financial condition of accounts receivable and, where
appropriate, collateral is received from customers usually in the form of a cash deposit.
The carrying amount of financial assets recorded in the consolidated financial statements, net of any allowances for losses,
represents the Group’s maximum exposure to credit risk without taking account of the value of any collateral obtained.
106
26. Financial instruments (continued)
28. Share capital
Liquidity risk management
Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has built an appropriate
liquidity risk management framework for the management of the Group’s short, medium and long-term funding and liquidity
management requirements. The Group manages liquidity risk by maintaining adequate reserves, banking facilities and
reserve borrowing facilities by continuously monitoring forecast and actual cash flows and matching the maturity profiles of
financial assets and liabilities. The details of the available undrawn facilities that the Group has at its disposal at 31 December
2011 to further reduce liquidity risk is included in Note 22. The majority of the Group’s financial liabilities as detailed in the
consolidated statement of financial position are due within one year.
Financial liabilities are repayable as follows:
On demand or within one year
In the second year
In the third to fifth years inclusive
After the fifth year
2011
AED’000
2010
AED’000
22,150,964
2,169,336
1,971,295
826,737
27,118,332
23,135,244
6,178,916
283,650
29,983
29,627,793
The above table has been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on
which the Group can be required to pay. The table includes both interest and principal cash flows.
Fair value of financial instruments
Borrowings are measured and recorded in the consolidated statement of financial position at amortised cost and their fair
values are disclosed in Note 22. The carrying amounts of the other financial assets and liabilities recorded in the financial
statements approximate their fair values.
27. Provision for end of service benefits
2011
AED’000
2010
AED’000
Authorised:
8,000 million (2010: 8,000 million) ordinary shares of AED 1 each
8,000,000
8,000,000
Issued and fully paid:
7,906.1 million (2010: 7,906.1 million) ordinary shares of AED 1 each
7,906,140
7,906,140
Reconciliation of movement in share capital
At 1 January
Bonus issue of fully paid shares (2010: 718.7 million)
At 31 December
7,906,140
7,906,140
7,187,400
718,740
7,906,140
2011
AED’000
7,850,000
8,070,000
56,641
(335,865)
12,963,491
82,459
28,686,726
2010
AED’000
7,650,000
7,822,000
10,332
9,429
12,402,383
142,019
28,036,163
29. Reserves
Development reserve
Asset replacement reserve
Statutory reserve
Translation reserve
General reserve
Investment revaluation reserve
a)
Development reserve, asset replacement reserve and general reserve
These reserves are all distributable reserves and comprise amounts transferred from unappropriated profit at the
discretion of the Group to hold reserve amounts for future activities including the issuance of bonus shares.
b)
Statutory reserve
In accordance with the UAE Federal Law No.8 of 1984, as amended, and the respective Memoranda of Association of
some of the Group’s subsidiaries, 10% of their respective annual profits should be transferred to a non-distributable
statutory reserve. The Corporation’s share of the reserve has accordingly been disclosed in the consolidated statement
of changes in equity.
c)
Translation reserve
Cumulative foreign exchange differences arising on the translation of overseas operations are taken to the
translation reserve.
d)
Investment revaluation reserve
The cumulative difference between the cost and carrying value of available-for-sale financial assets is recorded
in the Investment revaluation reserve.
The movement in the provision for end of service benefits is as follows:
Balance as at 1 January
Reclassification
Charge for the year
Payments during the year
Balance as at 31 December
2011
AED’000
834,283
127,818
(123,354)
(10,736)
828,011
2010
AED’000
882,334
(69,665)
46,068
(15,230)
(9,224)
834,283
The above provision was based on the following significant assumptions:
Discount rate
Average annual rate of salary increase
Average period of employment
107
2011
3.61%
3.94%
15 years
2010
3.61%
3.94%
15 years
108
30. Commitments
31. Contingent liabilities
a)
Capital commitments
The Group has approved future capital projects and investments commitments to the extent of AED 4,391 million
(2010: AED 4,536 million) of which AED 2,313 million (2010: AED 3,200 million) had been committed at 31 December 2011.
b)
Lease commitments
(i) The Group as lessee
Minimum lease payments under operating leases recognised
as an expense in the year (Note 5)
2011
AED’000
2010
AED’000
319,945
545,877
At the reporting date, the Group had outstanding commitments for future minimum lease payments under
non-cancellable operating leases, which fall due as follows:
Within one year
After five years
2011
AED’000
549,355
2,287,231
1,273,554
4,110,140
2010
AED’000
418,781
1,835,553
1,374,760
3,629,094
(ii) The Group as lessor
Property rental income earned during the year was AED 16 million (2010: AED 15 million). All of the properties held
have committed tenants for the next 2-5 years.
At the reporting date, the Group had contracted with tenants for the following future minimum lease payments:
109
Bank guarantees
At 31 December 2011, the Group’s bankers had issued performance bonds and guarantees for AED 1,294 million (2010:
AED 1,053 million) in relation to contracts. Guarantees relating to the Corporation’s overseas investments amounted to
AED 1,197 million (2010: AED 1,000 million) and promissory notes amounted to AED 1,400 million (2010: AED 1,293 million).
b)
Regulatory and other matters
Infrastructure sharing agreement
During the year ended 31 December 2009, Etisalat DB had signed a Passive Telecom Infrastructure Sharing Agreement
with Reliance Infratel Limited (“RITL”) for sharing of passive infrastructure. However, due to certain technical matters,
claims totalling INR 7,935 million or AED 547 million (2010: INR 1,952 million, AED 160 million) have been made by RITL
in relation to this agreement, which Etisalat DB has rejected.
No provision has been made in these consolidated financial statements as the Group’s management do not believe that
there is any probable loss arising from the above matter.
Operating lease payments represent rentals payable by the Group for certain of its office and retail properties.
Leases are negotiated for an average term of two years and rentals are fixed for an average of two years.
2011
AED’000
11,418
2010
AED’000
16,459
32,951
37,782
After five years
13,195
21,129
57,564
75,370
Within one year
a)
Licence fees
On 2 April 2011, the Central Bureau of Investigation of India filed a charge sheet alleging certain irregularities at the
time of grant of the telecom licence to Swan Telecom Private Limited (the erstwhile name of Etisalat DB) along with
certain other operators. The management of Etisalat DB is currently scrutinizing documents related to these charges and
attending related court proceedings.
Foreign exchange regulation
On July 23 2011, Etisalat DB (“Company’) received a show cause notice from the Directorate of Enforcement (ED) of India
alleging certain breaches of the Foreign Exchange Management Act, 1999 (FEMA), by the Company and its Directors.
The management of Etisalat DB is currently assessing their position and co-ordinating with the relevant agencies in
preparing their response to the notice.
32. Dividends
Amounts recognised as distributions to the equity holders:
31 December 2011
Final dividend for the year ended 31 December 2010 of AED 0.35 per share
Interim dividend for the year ended 31 December 2011 of AED 0.25 per share
31 December 2010
Final dividend for the year ended 31 December 2009 of AED 0.35 per share
Interim dividend for the year ended 31 December 2010 of AED 0.25 per share
AED’000
2,767,149
1,976,535
4,743,684
2,515,590
1,976,535
4,492,125
110
32. Dividends (continued)
A final dividend of AED 0.35 per share was declared by the Board of Directors on 22 February 2011, bringing the total dividend
to AED 0.60 per share for the year ended 31 December 2010.
An interim dividend of AED 0.25 per share was declared by the Board of Directors on 18 July 2011 for the year ended
31 December 2011.
A final dividend of AED 0.35 per share was declared by the Board of Directors on 20 February 2012, bringing the total
dividend to AED 0.60 per share for the year ended 31 December 2011.
33. Earnings per share
2011
2010
Earnings (AED’000)
Earnings for the purposes of basic earnings per share being
the profit attributable to the equity holders of the Corporation
5,839,019
7,630,750
Number of shares (‘000)
Weighted average number of ordinary shares for the purposes
of basic earnings per share
7,906,140
7,906,140
The Group does not have potentially dilutive shares and accordingly, diluted earnings per share equals to basic earnings
per share.
111
112
Notice of General Annual Shareholders’ Meeting
Invitation to attend the General Annual Shareholders Meeting for
the Emirates Telecommunications Corporation
The Emirates Telecommunications Corporation ‘Etisalat’ Board of Directors is pleased to invite their esteemed shareholders to the
General Annual Shareholders’ Meeting to be held at 5:00 p.m., Tuesday 20th March, 2012 at the Etisalat Head Office in Abu Dhabi,
for the purpose of transacting the following ordinary business:
1.
To note the minutes of the Annual Shareholders Meeting held on 22 March, 2011
2.
To listen to and adopt the report of the Board of Directors on the Corporation’s activities and financial position for the fiscal
year ended 31 December, 2011.
3.
To listen to and adopt the External Auditors report for the fiscal year ended 31 December, 2011.
4.
To discuss and adopt the Corporation’s balance sheet and profit and loss statements for the fiscal year ended 31 December 2011.
5.
To look into the Board of Directors recommendation on the distribution of dividends in the form of 60 fils per share for the
fiscal year ended 31 December, 2011.
6.
To absolve the Members of the Board of Directors and External Auditors of liability in respect of the fiscal year ending
31 December, 2011.
7.
To appoint External Auditors for the current fiscal year and set their remuneration.
8.
To elect four Members of the Board of Directors to represent the Private Sector shareholders.
Notes:
1.
All shareholders listed in the Corporation’s share registrar on the date of March 19, 2012 are entitled to attend or appoint a
proxy on his or her behalf using the available forms to attend the general annual assembly. Proxy forms may be submitted to
the securities department of the National Bank of Abu Dhabi PO Box 6865 at least two day prior to the Meeting date, for the
purpose of record keeping. Only official forms will be accepted.
2.
In the case of a shareholder attending after the opening of the meeting, his or her shares will not be considered in the
attendance quorum or for voting on decisions.
113

Annual report_V10 5.indd

Transcription

Similar documents

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

NewsFlash AED group 09_2014

MEMBERSHIP APPLICATION

AIVIA GENERAL ANGLAIS light

OPA! GREEK FESTIVAL AT AL RAHA BEACH HOTEL

AED Plus Trainer2 Training Accessories

US AIVIA 320_Blanc

Evosys` Value Chain Planning

- Defibtech

LIFELINE AED® Semi-automatic Defibrillator