Saudi Telecoms Sector: Mobily still ahead

Etihad Etisalat CompanyTelecom –Industrial04 December 2011Corporate summary Share information ValuationEtihad Etisalat (Mobily) is the secondplacedtelecoms operator in SaudiArabia, with a market value ofUS$9.3bn. Mobily has a market shareof mobile accounts of about 40%,although its revenue share is lower at30%. Mobily has at least 42% of mobilebroadband subscriptions; this is thefastest-growing segment of the Sauditelecoms market. Mobily’s presence infixed-line service is very limited, butshould expand due to selectiveacquisitions. Mobily is an affiliate ofEmirates Telecoms Corp., which owns27.5% of its shares.Market cap (SAR/US$) 35.00bn / 9.33bn52-week range 43.00 - 56.00Daily avg volume (US$)8.72mnShares outstanding700.0mnFree float (est) 55.3%Performance: 1M 3M 12MAbsolute -2.4% -5.2% -9.9%Relative to index -0.4% -7.4% -6.4%Major Shareholder:Emirates Telecoms Corp. 27.5%Gen. Organisation for Social Insce. 11.2%Source: Bloomberg, Al Rajhi CapitalPeriod End 12/10A 12/11E 12/12E 12/13ERevenue (SARmn) 16,013 19,474 22,226 24,827EBITDA (SARmn) 6,165 7,276 8,084 8,814Net Profit (SARmn) 4,211 4,910 5,417 5,915EPS (SAR) 6.02 7.01 7.74 8.45DPS (SAR) 2.00 3.00 3.00 3.38EPS Growth 39.7% 16.6% 10.3% 9.2%EV/EBITDA (x) 6.6 5.8 5.0 4.2P/E (x) 8.3 7.1 6.5 5.9P/B (x) 2.2 1.9 1.6 1.4Dividend Yield 4.0% 6.0% 6.0% 6.8%Source: Company data, Al Rajhi CapitalQ4: modest resultsBelow we present our forecasts for Q4 full year 2011:Figure 15. Mobily : Q4 & FY2011 estimatesSAR mn Q4 2010A Q4 2011E YoY chg. % FY 2010A FY2011E YoY chg. %Revenue 4,471 5,224 16.8% 16,013 19,474 21.6%EBITDA 1,948 2,126 9.1% 6,165 7,276 18.0%Operating Profit 1,465 1,572 7.3% 4,355 5,123 17.6%Net Profit 1,459 1,516 3.9% 4,211 4,910 16.6%Source: Company data, Al Rajhi CapitalDisclosures Please refer to the important disclosures at the back of this report. 16