The UAE's largest telecom operator etisalat's $2 billion (Dh7.34 billion) share buyback will take place over the next two years, international ratings agency S&P Global said.

The telecom major had announced its intention to buy up to 5 per cent of its paid-up capital, or 434.8 million shares, in March 2018.

Its shares gained 2.1 per cent on Thursday in line with the surge in Abu Dhabi index.

"We do not expect any significant impact from the $2 billion share repurchase announced in March, even though it would increase the group's leverage and liquidity position, albeit marginally," it said, adding that the dividends and royalty payments of Etisalat Group and du combined account for about 20-25 per cent of the UAE federal government's budget.

The global ratings agency awarded "stable" outlook to the UAE's largest telecom operator. S&P expects rating has limited upside in the next 24 months because it sees "AA-" as the highest possible rating for Etisalat Group based on the current asset mix.

The UAE's largest telecom operator saw its overall revenues for 2017 falling by 1.33 per cent - or Dh700 million - to Dh51.7 billion as compared to Dh52.36 billion in the previous year. S&P expects revenues to increase between Dh52 billion and Dh53 billion in 2018 financial year but they are projected to remain static next year.

"We believe the introduction of a fourth mobile operator in Egypt, and currency risk in Pakistan, will weigh on revenue growth and EBITDA margin expansion," it said in a note.

S&P expects company's adjusted funds from operations to debt will remain above 60 per cent.

 

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