Financial Analysis of Etisalat and Du Telecom: A Comparative Report

This report presents a financial analysis of two telecommunications companies, Etisalat and Du, to compare their performance over a two-year period. The analysis employs financial statements and ratio analysis, including liquidity, solvency, and profitability ratios such as inventory turnover, current ratio, debt-to-assets ratio, and profit margins. The study aims to assess the companies' financial health, stability, and business practices by examining their income statements, balance sheets, and cash flow statements. The research methodology primarily uses ratio analysis to compare the companies and present a true picture of their financial standing. The report provides an overview of the companies' operations, including their market share, services, and key executives, and concludes with an understanding of financial analysis techniques. This assignment successfully demonstrates an understanding of financial analysis techniques, applications, and methodology, enabling their future application with ease. The report also includes references to relevant sources.

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
Emirates 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
techniques, applications and methodology of financial analysis and will be able to apply them in
future 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
methods 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
stability, solvency, liquidity or if it is profitable enough to provide for sufficient interest and debt
service 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
information. (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 equivalent to a summary of a company’s liabilities, equity and assets at a point of time, they
play a pivotal 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
investment making decisions. In addition to Balance sheet and income statement, there is a third
perspective to analysis, that is, cash flow statement analysis, which helps in understanding the
incoming 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
market 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 dynamics and provided affordable mobile internet access for vast range of people
(English.mubasher.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 telecommunications needs of individuals and businesses in the UAE and Gulf region and has

been able to build a modern telecom infrastructure, which has established them as technology
leader. The company serves the needs of people to reach each other and also the needs of the
businesses to find new markets, and can boast of a whopping number of close to 141 million
subscribers spread in 15 countries across the Middle East Asia and Africa. The company is into
providing telecommunications services, media and related equipment including related
consultancy and contract services to international companies and consortia. The corp is a one
stop shop for mobile and fixed line voice and data services to all the types of clientele be it
individuals or enterprises. It’s one of the world’s most renowned and prioritized telecom groups
in emerging markets and has high credit ratings which reflect the company’s strong
fundamentals & proven long-term performance.
Lets understand briefly about the other largest telecom company of UAE, which is a dynamic
and multiple award-winning telecommunications network provider which serves around 9
million individual customers with its mobile, fixed line, lan based internet, and Home services
over its 4G LTE network-Emirates Integrated Telecommunications Company, commercially
rebranded as DU (Kadiri and Lawal, 2019). It was commercially branded as Du in February,
2006 and close to 4.5 million subscribers aa at the end of March,2011.The company
headquartered at Dubai has 2000 employees currently. DU also serves to over 100,000 UAE
businesses with its vast range of ICT and managed services and is headquartered in Dubai Media
City, Dubai Emirate. Du generates $2.2M in revenue per employee and its top competitor is
Etisalat, founded in 1976 which is quite an old player, when compared to DU which was founded
in 2005. Osman Sultan is the CEO of Du which is a public company listed on Dubai Financial
Markets. It has a wide range of products offerings including mobile phone plans, handsets,

contents and broadband. Du's fixed segment provides wire like services to the enterprise and
consumer segment markets, while it’s wholesale segment is more into providing voice and data
services both to domestic and international carriers and operators. Such services are inclusive of
inbound international voice traffic termination, point to point leased line connectivity and
international roaming agreement. The other segment which is broadcasting segment is offering
the media companies services of integrated satellite and provides broadcasters the broadcasting
services too.
References

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