UAE telecom operator du reveals government royalty fees for 2017 – 2021

The company will pay a royalty fee of 30 per cent on its annual profit

Emirates Integrated Telecommunications Company (EITC), the parent company of du, revealed that royalty rates paid to the UAE government will remain unchanged from current levels for the next five years.

Under the federal royalty scheme, revealed by the UAE Ministry of Finance for the period 2017 – 2021, EITC will pay a royalty fee of 30 per cent on its annual profit.

Meanwhile its revenues will be subject to a royalty rate of 15 per cent.

“The fee set by the federal government applies only to licensed services from the Telecommunications Regulatory Authority (TRA). Total revenues from bundled offerings, incorporating both licensed and non-licensed services, shall be subject to the same royalty rates,” a statement said.

The company reported a 9.7 per cent drop in net profit for 2016, mainly because of higher royalty fees. EITC posted a net profit after royalty of Dhs1.75bn in 2016, compared to Dhs1.94bn in 2015. Net profit before royalty rose marginally by 0.1 per cent, while revenues rose 3.2 per cent year-on-year.

Osman Sultan, EITC’s CEO said, added: “Our underlying financial and operational performance in 2016 was solid. We added almost a million new mobile customers during the year, while our focus on cost efficiency maintained our EBITDA levels.

“While most of our key indicators showed improvement in 2016, a near 10 per cent rise in the amount of royalty paid to the government meant net profit was lower compared with the previous year.”

In January, EITC announced plans to launch Virgin Mobile as a new brand in the UAE. EITC said it has entered into a brand licensing agreement with Virgin Mobile, and will have the complete ownership, management and operation of the brand in the country.

Just like du, Virgin Mobile will use the network, IT and other infrastructure of EITC.

Read more: Du holding company to launch Virgin Mobile brand in UAE

Earlier this week, EITC’s rival Etisalat also confirmed a similar royalty fee structure for the next five years.

Read: UAE sets 2017-2021 royalty fees for telecoms operator Etisalat