Financial Analysis of Telecommunications Companies in UAE

FINANCIAL ANALYSIS
Abstract
In this paper, we shall study the financials of two telecommunications companies for the purpose
of analysis and comparison of their current and expected performance over the period of 2 years-
Emirates Telecommunication Group Company PJSC, branded trade name ETISALAT and Emi-
rates Integrated Telecommunications Company, commercially rebranded as DU. For the said
purpose, we shall use relevant accounting statements and also indulge in comparative analysis
using ratios to be conducted on the basis of profit and loss statement and balance sheets of the
organizations mentioned above.. With analysis of the said companies’ financial records such as
income statements and the balance sheet, cash flows etc, we shall be able to conclude on their
health and stability and also understand the ways and methods of their conduct of business in a
better manner. With this assignment, we have been successfully able to understand the tech-
niques, applications and methodology of financial analysis and will be able to apply them in fu-
ture with ease. The research methodology primarily used is ratio analysis which involves the
study and interpretation of various liquidity, solvency and profitability ratios such as Inventory
turnover ratio, Current ratio, Debt to assets ratio, GP margin, Operating profit margin, EBITDA
analysis, EPS analysis and DuPont analysis. A combination of various historically proven meth-
ods has been used to draw a comparison between the given companies which essentially provide
a true picture removing any discrepancies in accounting treatment and principles.
Introduction

Financial Analysis of any company is conducted to decide about or analyze a company’s stabil-
ity, solvency, liquidity or if it is profitable enough to provide for sufficient interest and debt ser-
vice coverage. It is in all done to assess and evaluate budgets, mutually exclusive projects, the
business segments, and all the other finance related activities with a view to determine their
standards, suitability and performance. Conducting a review of how a business is performing
can prove daunting, since it requires an organized collection and evaluation of financial informa-
tion. (Anon, 2019) Financial analysis can be performed using data from two sources, depending
on the nature and purpose, profit and loss and income statements. As Balance sheets are equiva-
lent to a summary of a company’s liabilities, equity and assets at a point of time, they play a piv-
otal role in completing analysis for many reasons.
The knowledge and understanding of a company’s financial statement is important for investors
to analyze the profit ratio and future perspectives of a company and also taking the future invest-
ment making decisions. In addition to Balance sheet and income statement, there is a third per-
spective to analysis, that is, cash flow statement analysis, which helps in understanding the in-
coming and outgoing of cash and its equivalents over the time period in consideration.
We shall begin with, Emirates Telecommunication Group Company PJSC, branded trade name
Etisalat, is an Emirati based telecommunications services provider, has come across major mar-
ket share as it expands across Africa, Asia and the Middle East, most notably in Egypt and Saudi
Arabia, where the introduction of innovative mobile broadband services has changed market dy-
namics and provided affordable mobile internet access for vast range of people (English.mubash-
er.info, 2019). The company is headquartered in Abu Dhabi, United Arab Emirates, with CEO
being Mr. Saleh Al Abdooli Since 1976,Etisalat has been serving most of the telecommunica-
tions needs of individuals and businesses in the UAE and Gulf region and has been able to build