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EITC planning to raise Dh2.4b through IPO

The company will offer 800 million shares at Dh3, which includes Dh2 premium. Emirates Bank and Emirates Financial Services (EFS) are set to lead manage the IPO.

The new telecom company, expected to begin operations in the second half of this year, will offer 20 per cent of its shares to the public through an IPO.

The UAE Supreme Committee for the Supervision of the Telecommunications Sector (SCSTS) last week signed a full-services telecom licence with EITC granting the new company the licence to install, operate, and manage a public telecom network in the country.

With the company securing the licence, the official announcement regarding the IPO is expected very soon.

The licence from SCSTS allows EITC to offer fixed and mobile telecom services, besides providing international telecom connectivity. The company will be able to offer Internet and other services in the near future subject to the SCSTS’ approval.

EITC will pay Dh124.5 million as a licence fee and the licence can be renewed annually for Dh1 million.

Currently, 50 per cent of EITC’s Dh4 billion capital is owned by the UAE government, while 25 per cent each is owned by Mubadala Development Company and Emirates Communication and Technology LLC. Post- IPO, the founding investors’ shareholdings will be proportionately diluted totalling 20 per cent of EITC’s total capital.

The Telecom Regulatory Authority (TRA) sources have confirmed that the new entity will offer mobile, internet and fixed line services, starting with mobile services in the second half of this year.

EITC is currently negotiating with Etisalat under the supervision of TRA for interconnection and once they reach an agreement EITC will begin its services.

As the second operator of a wide range of telecommunications services in the UAE, EITC’s public offering is eagerly awaited by the UAE stock market. “Although EITC will have a significant shareholding by the government, it will be an independent telecom operator and is expected to function as an effective competition to Etisalat. As the UAE market is well developed for GSM, Internet and wireless services, the new entity is expected to gain a critical minimum market share in short time frame,” said an industry analyst.

A federal decree issued in April 2004 restructured the telecom sector in the UAE, ending the monopoly held by Etisalat, which is also a partner in the UAE’s Thuraya Satellite Telecommunications Company. Etisalat has over 4 million GSM users and close to 430,000 Internet subscribers in the UAE. The introduction of a second telecom operator will pave the way for a full liberalisation of the market by 2015.