Feb. 21 (Bloomberg) -- Emirates Telecommunications Corp. advanced the most this month after the United Arab Emirates’ biggest phone company said it planned to outsource some operations to cut costs and proposed a 2011 dividend.
Shares of the company also known as Etisalat surged as much as 3 percent, the most since Jan. 29, to 9.6 dirhams before trading at 9.52 dirhams at 12:53 p.m. in the U.A.E. capital, Abu Dhabi. The stock has the heaviest weighting on emirate’s index and was the biggest gainer by index points today. The ADX General Index rose 0.9 percent to 2,526.62, the highest intraday level since Oct. 3. It’s advanced 5.2 percent so far in 2012 after last year’s 12 percent drop.
“There is some excitement on cost cutting,” said Shehzad Janab, the head of asset management at Dubai-based Daman Investments. He added investors were also responding to Etisalat’s dividend plan. The company’s board proposed yesterday a dividend of 60 fils for 2011, the same amount it paid for 2010.
Etisalat, which has posted declining profit for the past two years, said late yesterday it was looking at ways to reduce costs and improve services. The company that derives about three quarters of its revenue from the U.A.E. has lost market share to Emirates Integrated Telecommunications Co., known as Du. Etisalat’s shares, which fell 15 percent last year, are up 4.5 percent so far this year.
The company’s board “discussed the reduction and control of operating expenditures by initiating restructuring and outsourcing plans as a future strategy,” it said in an e-mailed statement.
Etisalat missed analysts’ estimates when it reported on Feb. 9 a 23 percent drop in 2011 profit to 5.84 billion dirhams, compared with the 7 billion-dirham mean estimate of nine analysts. Earnings suffered from an impairment of 1.02 billion dirhams ($278 million) related to canceled licenses in India.
Six analysts recommend investors buy Etisalat shares, while four have a hold recommendation on the stock, according to data compiled by Bloomberg.
--Editors: Daliah Merzaban, Peter Branton
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