Value Creation

A case study of Etisalat

The importance of value creation:

The main aim of any business organization is the creation of value. The creation of the value for
the customers is important to sell their products and services while the value creation for the
shareholders becomes important so as to increase the prices of the company’s shares and to
ensure that the future investment by the investors on the company (Mazurek, 2014). In terms of
financial the business activities of a company is said to generating value when the revenue
earned from the business activities is more than the total expenses. But in the modern times the
scope of the value creation has widen. According to the Financial experts in the modern
economic scenarios the prices of the stocks of a company is less dependent upon the earning and
asset value of the company but instead it is affected by the other tangible factors like the
innovation, people, ideas and brand. The first step for a company to focus on a scope of value
creation is to first identify the marketplace and industry for the value creation. If the managers of
the company are able to identify the source of value relevant for the company then they can
focus all their resources and manpower gain opportunity for the growth of the company. "If
customers value consistent quality and timely delivery, then the skills, systems, and processes
that produce and deliver quality products and services are highly valuable to the organization".
Among various companies Coca Cola and Lloyds bank are the two such major companies who
have used value creation to drive their growth factor. By focusing on the value creation Coca-
cola was able to generate a return of 60% in 1997 whereas by focusing on value creation Lloyd’s
was able to get around 40% on its equity (Kolachi and Akan, 2014). Thus it can be said that the
value creation has enabled these companies to become not only profitable but also fastest
growing companies in the world.

Introduction:
In this research study value creation of Etisalat (Emirates Telecommunications Corporation) will
be focused. Etisalat is an MNC which provides telecommunication services in around 15
countries of the world. It’s headquarter is situated in Abu Dhabi. It is considered to be the
seventeenth largest mobile operator in the world and has a total consumer base of around 150
million.
Etisalat is one of the major internet service providers in the Middle East and it also provide
connectivity services to the various other. Further this company is the largest carrier of Voice
traffic in the Middle East and Africa. Further the company is also ranked on 12th in the world in
terms of voice traffic.

Age:

The Etisalat first started its operation in the year 1976. Initially company was started as a
partnership between the International Aeradio Limited which was a British company and some
local companies. In the year 1983 the government of the United Arab Emirates took over 60% of
the share and the remaining 40% of the shares were traded public.

Assets of the company:

As per the 2014 annual report of the company, going as per its strategy for acquisition and The
Company bought 53% stake in the Maroc telecom. This was one of the largest and the complex
deal that the Etisalat has ever signed. Also it was one of the largest cross border merger and
acquisition deal in the Middle East and North Africa. This strategy of the company to combine
assets of both the company helped Etisalat to become one of the largest telecom groups in West
Africa. Apart from the other assets the Company also considers that the people working in the
company are one of its most important assets. Thus company has been continuously trying to
focus on the leadership development and is trying to empower its employees (Jonikas, 2013).
The company has also started talent development initiatives in the company and as a result the
employee satisfaction rate and the involvement of the employees in the organization have
gradually increased. In the Financial year 2014 the net value of the total assets of the company
was 129,585 million while in the year 2013 the net value of the total assets of the company was
85,716 million. The total non-current assets of the company are at 91,410,587 and the current
assets of the company which include inventories, trade receivables and other assets are of the
value 37,641,214.

Products of Etisalat:

Etiosalt has followed the strategy of differentiation in the products so as to get access to the wide
range of customers and to maintain its profit margin in the global turbulent economic times. The
different types of the products and services of the company include Voice services such as trhe
Al Mersal for the fixed line customers which is a type of voice mail services. This feature allows
the users of the company to remain in touch with each other when opne cannot answer the phone
or is not present in home. The next product of the company is in the category of internet and
data. Under its new plans the company is offering the speed of 100mbps in the low fee of AED
725/month. These features are added keeping in mind the requirements of the business
organizations. The next product of the company is the Mobile and Wireless services. The
company is providing the Black berry Enterprise solution along with the wireless and mobile
connections which will be helpful to business organization in boosting their performance.
Etisalat is providing the latest 4G LTE and the 3G network options to its customers. It is also
following per second billing option. Another service provided by the company is the e-payment
services. The company in this segment is providing various facilities like the online
authorization, real time service delivery and 24×7 support system (Etisalat.com, 2016). The latest
addition in the list of services provided by the company is the Etisalat hosting services. This
service is aimed to help the company to focus on their core business areas and saving the
additional cost spent on the infrastructure development for the IT. It is also helping the business
organizations to get access to the latest technologies in the market. Further the company is also
providing its customers the messenger services. This service helps the customers to send and
receive both voice and multimedia messages. This product is basically aimed at the business
people who require multiple platforms for messaging.

Background of the company:

The major operations of Etisalat started after the UAE government passed the federal law no. 1
in the year 1991. This law enabled the company to provide telecom services both wiored and
wireless services in the UAE and in between UAE and other countries (Etisalat.com, 2016). This
law enabled the company to issue licenses for the manufacturing, owning and importing of the
goods that are related to the telecommunications. This law made the company the sole rights to
manage the telecom sector in the country. The growth and development of the Etisalat after the
passing of this law can be witnessed from the fact that the exchange lines have increased from
the 36,000 in 1976 to 737,000 in 1998. As per today Etisalt is among the top countries in the
fortune 500 companies and is the sixth largest company in the Middle East.

The current share price of the company is around 16.40 AED. The total volume of the shares as
of 28/January/2016 stands around 5,621,757. In the year 2016 the average rate of the company
shares is around 15.95/share. This shows a gradual increase in the last year share prices of the
company.

Source: (Quotes.wsj.com, 2016)

Conclusion:
The rapid growth of the economy and the advancement in the field of technology has helped the
company to play an important role in the country. To keep itself updated with the latest
technological services the company is launching innovative services to tap the emerging market
of the tech savvy customers (Customer Value Creation International, 2015). The management of
the company is highly supportive towards innovation in the product and services so as to provide
unique experience to the clients. This has helped the company to increase its business value in
the telecom sector in the region of Middle East and Africa. The successful growth of the country
can be due to various factors such as the values and vision of the company’s management and
the improvements in its network. The company’s mission is in sync with the company’s vision of
seeing a world where world reach people irrespective of the distance between them.
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