Abu Dhabi – Mubasher: Research firm NBK Capital, a subsidiary of the National Bank of Kuwait, has set the fair value (FV) of Abu Dhabi-listed Emirates Telecommunications Corporation “Etisalat” at AED 16.8, a 39% rise. The firm also gave the stock the recommendation ‘buy’.

NBK Capital’s recommendation follows Etisalat’s announcement of its financials for the fiscal year ended December 31, 2014, in which profits exceeded “due to lower-than-expected royalty charges”, the firm said.

Etisalat reported a net profit after Federal Royalty of AED 8.9 billion ($2.42 billion) in 2014 against AED 7.1 billion ($1.93 billion) in 2013.

The telecom stock ended Sunday at a 1.24% rise to AED 12.20.

UAE operations (53% of Q4-14 revenue) maintained its solid growth for the Abu Dhabi-listed firm, registering a revenue growth by 11% YoY to AED 7.0 billion, the highest growth rate this year, “mainly due to bundles (fixed and mobile) and higher handset sales (iPhone 6)”.

Higher interconnection costs added to increased handset sales resulted in a slightly restricted 5% YoY EBITDA growth, which translated to an EBITDA margin of 51% in Q4-14 from 53% in Q4-13, NBK Capital highlighted.

Meanwhile, in Egypt, 5% YoY revenue growth was wiped out by local currency depreciation. The EBITDA margin declined to 31% in the fourth quarter of 2014 compared to 40% in the third quarter, as a result of a one-off provision related to the ongoing dispute on interconnection rates.

“Excluding this one-off provision, the EBITDA margin would have been 38%”, the firm added.