UAE telco du’s profit falls again in Q3

Du, the United Arab Emirates’ number two telecom operator, reported a 6.7 per cent fall in third-quarter net profit on Tuesday, extending an earnings slump to an eighth quarter, but beat analysts’ average estimate.

The firm had reported declining profits in the preceding seven quarters, according to Reuters data. Chief executive Osman Sultan said in July the firm needed to regain momentum in the prepaid mobile market if it was to counteract the impact of higher government taxes.

Du, which ended rival Etisalat’s domestic monopoly in 2007, made a net profit of Dhs457.2m in the three months to September 30, down from Dhs489.8m in the year-earlier period.

Three analysts on average forecast du would make a quarterly profit of Dhs435.2m.

Third-quarter revenue was Dhs3.14bn. This compares with Dhs3.05bn a year ago.

Du paid quarterly royalties – or tax – of Dhs537.9m, up from Dhs481.9m in the prior-year period.

The company’s results have been squeezed since late 2014 as growth of the mobile market has been offset by a steady increase in the royalty – or tax – paid to the government.

For 2016, du will pay 15 per cent of its regulated revenue – which excludes the likes of handset sales – and 30 percent of its regulated profit in royalties. These taxes are up from 12.5 and 30 per cent respectively in 2015 and have steadily increased from 2012 onwards.