Etisalat, now known as e&, aims to expand in Asia and Europe following a significant transformation.

• The telecom division, which operates in 16 markets and includes its Etisalat UAE business, will remain unchanged.
• One of the largest listed businesses in the UAE and one of the largest listed telcos in the Middle East by market capitalization is e&.

The United Arab Emirates' largest telecommunications provider, Etisalat, has rebranded to "e&" and announced a strategic restructure aimed at attracting new investments and expanding globally.

Hatem Dowidar, CEO of e&, expressed his desire to improve the company's performance in an exclusive interview with CNBC. He cited the success of tech giants and their impressive market caps and returns as inspiration for e& to step up its game.

The telecom division, which operates in 16 markets and includes its Etisalat UAE business, will remain unchanged. However, the company will split its consumer and enterprise divisions into new business verticals such as "e& life" and "e& enterprise." Additionally, a new vertical called "e& capital" will be established as an investment arm to focus on joint ventures, acquisitions, and startup investment opportunities.

According to Omar Maher, the associate director of telecom research at EFG-Hermes, the answer to whether the strategy makes sense is yes.

The traditional telco model is no longer sufficient for telcos, including Etisalat, as they face intense competition from OTT players such as Google and Facebook, who benefit from the digitization of the world without contributing to the connectivity costs.

New business and overseas expansion

EFG-Hermes analysts predict low-single-digit revenue growth and stable margins for e& in the upcoming year. Maher stated that the restructuring could help to determine the value of Etisalat's assets as they are separated and potentially listed as independent entities. Dowidar did not rule out the possibility of asset divestments or listings as part of future growth plans.

Dowidar stated that when the businesses are prepared, they will examine whether to invite partners or list some of them. He explained that as the businesses reach maturity, some listings may be made, either for the division or some of the companies under the division, but they will all remain under the e& umbrella.

In recent years, the company has made acquisitions, such as Help AG, Khazna, and elGrocer, and has also entered the digital banking market with a partnership deal for WIO.

"The new structure appears to bring about many changes in the future," Maher stated.

The group intends to expand its reach in Asia and Europe by targeting unspecified countries and companies over the next 18 months to drive growth, but remained vague about the specifics.

Dowidar stated that the company is currently focusing on markets with geopolitical stability and a mature regulatory environment. Additionally, he emphasized the importance of diversifying sources of revenue and profit, as well as achieving currency stability, on the telco side.

Whatsapp, FaceTime bans stay in place

Despite ongoing frustration over the ban on Whatsapp and Facetime calls in the UAE, which is believed to be due to security concerns and the protection of the revenues of the state's two telecom providers, E& and Du, the expansion of services continues.

The decision to unblock Whatsapp voice and video calls is not up to the telco, but rather the regulator, given the size and business of the company, as stated by Dowidar.

Dowidar stated that there may be regulatory requirements that they cannot fulfill.

When asked about security being a concern, he replied, "I have no clue."

In 2020, the UAE eased some restrictions on work from home tools like Zoom and Skype, but the most widely used services remain banned, prompting residents to resort to fee-based services offered by telcos.

In the 2021 financial year, e&, one of the largest listed businesses in the UAE and one of the largest listed telcos in the Middle East by market capitalization, reported a consolidated full year net profit of 9.3 billion dirhams ($2.5 billion).