UAE’s Etisalat says will allow foreign share ownership

Etisalat, the United Arab Emirates’ former telecoms monopoly, said on Monday restrictions on who could own its shares would be partly lifted, opening the Gulf state’s largest stock to foreign and institutional ownership for the first time.

The telecoms operator did not state in its bourse filing when the change would take effect, but said local and foreign institutions and expatriate individuals would be able to hold up to 20 percent of the company.

The promise of an end to ownership restrictions follows a decision from the federal government, the statement said. However, Etisalat added that the Emirates Investment Authority (EIA), a UAE government fund that owns 60 per cent of the business, had no intention of reducing its Etisalat stake for the time being.

The remaining 40 per cent of Etisalat shares are owned by individual Emirati citizens.

No rationale for removing the ban was given in the statement.

The UAE joined MSCI’s Emerging Markets index at the end of May 2014, although Etisalat is not included by the index provider despite its size, which makes it the second-largest Gulf operator by market value behind Saudi Telecom and the fifth-largest stock in the region overall.

MSCI chooses to include stocks in its indexes based on a number of criteria, many of which are linked to the ease at which foreign investors can move in and out of positions.

Limitations on investing in certain shares are being gradually removed within the Gulf region, although many remain as governments see the stock market as a way of distributing oil wealth to the wider population.

Saudi Arabia earlier this month allowed direct foreign ownership on its stock market for the first time, while share flotations on a number of Gulf bourses are reserved for local participation only.

Etisalat has operations in around 18 countries across the Middle East, Africa and Asia and competes locally with du , which is open to foreign buyers and broke Etisalat’s monopoly in 2007. The EIA is the largest shareholder in both companies.