Du Posts 34% Rise In Q3 Profit As Margins Rise

Du, the United Arab Emirates’ No.2 telecom operator, reported a 34 per cent rise in third-quarter net profit on Monday, narrowly missing analysts’ estimates, despite increasing margins and adding new mobile and fixed line customers.

The firm, which ended rival Etisalat’s domestic monopoly in 2007, made a net profit after royalty of Dhs326.9 million ($89.00 million) in the three months to September 30, compared with Dhs244.3 million in the year-earlier period, according to a company statement.

Du provisions to pay 50 per cent of its profits in royalties – or taxes – to the federal government, with the government usually deciding the actual royalty rate after the financial year has ended.

Analysts polled by Reuters on average forecast du would make a quarterly profit of Dhs333.3 million.

Quarterly revenue was Dhs2.52 billion. This compares to Dhs2.23 billion a year ago.

“Financial performance during the third quarter was stable, with a solid improvement in data usage,” Chief Executive Osman Sultan said in the statement. “This reflects the global trend, which indicates a shift of some voice revenues to data.”

Sector profit growth has slowed as the UAE’s largely foreign workforce increasingly use internet-based services, hurting operators’ lucrative international call and text business.

Third-quarter mobile data revenue nearly doubled to Dhs323 million from a year ago. Overall mobile revenue rose 13 per cent over the same period to 1.94 billion to provide about three-quarters of du’s total revenue.

Du’s net profit margin before royalty was 25.9 per cent in the third quarter, up from 21.9 per cent a year ago

The telecoms operator had 5.96 million mobile subscribers on Sept. 30, adding 227,800 in the quarter. This gave it a 47.2 per cent share of the UAE’s mobile subscribers, the same as in the second quarter. It rapidly won customers from Etisalat, but subscriber growth is now slowing, with mobile penetration at 149 per cent or almost 1.5 subscriptions for every UAE resident.

The operator’s fixed subscribers stood at 555,000 at quarter-end, up 1.5 per cent from the previous quarter.

Quarter on quarter, overheads rose to Dhs752 million from Dhs733 million.

“Operationally, we maintained control on overheads, although we saw certain costs increase due to seasonality and with the initialisation of outsourcing arrangements,” Sultan added.