DUBAI: Emirates Integrated Telecommunications Company (EITC) reported revenues of AED 5.66 billion and a net income of AED 570 million for the first half of the year (H1 2020).

The Board of Directors approved the distribution to shareholders of an interim dividend of AED 589 million, equivalent to an interim dividend per share of 0.13 AED.

Due to the general lockdown of activity in the UAE during Q2 2020, EITC’s financial performance was negatively impacted from the limitation of sales activity, the change in customer behaviour and the strong reduction of tourism and trade activities.

EITC reported in H1 2020 total revenues of AED 5.66 billion driven by a contraction in mobile revenues and other revenues, partially offset by the continued growth in fixed revenues.

Q2 2020 mobile revenues were under pressure due to the movement restrictions across the country, which led to an erosion of the base as a result of lower gross additions and lagged churn and a shift in customer behaviour from prepaid mobile usage to fixed usage as companies implemented work from home initiatives. Therefore, H1 mobile revenues declined to AED 2.81 billion, coming mainly from the significant reduction in the prepaid customer base and the prepaid usage.

H1 2020 fixed revenues continued to grow at a rate of 4.8% year-on-year to AED 1.29 billion, reflecting a healthy increase in the subscriber base fuelled by the higher home connectivity needs during the quarter.

To sustain the increase in data traffic across the country and the company’s deployment plans, EITC invested in Q2 2020 AED 509 million, equivalent to 19.1% of revenues. In addition to investments in capacity upgrades and network maintenance, Capex were also allocated to 5G network rollout and the implementation of digital transformation initiatives, in line with the company’s plans to drive long-term value creation.

H1 2020 EBITDA was down to AED 2.32 billion, impacted by the decline in mobile revenues, the increase in spending to optimise customer offering during the second quarter, and the inelasticity of certain costs to revenue decline. Consequently, net income declined in H1 2020 to AED 570 million.

During the quarter, EITC implemented a cost efficiency program that should allow, with the start of the market recovery in Q3, to contain the erosion in EBITDA and net income. The cost efficiency program includes initiatives related to optimisation of resources, a reduction in marketing spend and renegotiation of supplier contracts.

EITC’s mobile subscriber base was 6.42 million at the end of Q2 2020, down from last year, mainly due to the combination of lower sales due to movement restrictions and the churn lag. Fixed customer base continued to increase at a healthy pace, reaching at the end of in Q2 2020 226 thousand subscribers, up by 6.8% from Q2 2019.

Commenting on the results, Johan Dennelind, CEO of EITC said: “Financially, we have seen, as expected, a severe negative impact on our business coming mainly from mobile revenues, as we are structurally more exposed to the prepaid sector and from “other revenues” due to the lockdown and travel restrictions. However, our fixed business continued to grow, boosted by the increase in demand for home connectivity. Consequently, for the first half of the year, we reported revenues of AED 5.66 billion and a net income of AED 570 million, down year on year, reflecting the unprecedented market conditions and the significant contraction in the economic activity.

“As a result, we have launched a cost efficiency programme to ease the pressure on our bottom line, the extent of which will also depend on the speed of the market recovery post lockdown. We launched several initiatives to optimise our cost structure and took immediate actions to reduce certain of our costs including marketing spend, optimisation of current resources and contract renegotiations and we expect to see savings realised in H2 2020.

“While the Covid-19 situation has impacted the business negatively in the short term, it has also demonstrated the relative resilience of our model as a vital sector for the economy and confirmed the need to accelerate our transformation towards more digitalisation, higher efficiency and further technology developments (Cloud, 5G, AI, ICT, etc.) to cope with the evolving needs of our customers.

“Therefore, we have accelerated our transformation program, and continued the deployment of our investment plans with capex spend for the half year period reaching AED 819 million, or 14.5% of revenues.

“Going forward, we expect to see a stabilisation and a gradual pick-up in economic activity in H2 2020, particularly as movement restrictions are being eased across the country, more and more people are returning to the office and tourists are starting to come back. We will continue to see severe impact on our year on year results but we expect to recover on a sequential basis for the rest of the year. As the situation remains fluid, we will continue to adhere to the highest health and safety precautions to protect our employees and customers.”