Local Business

Du’s third-quarter profit surges 45%

Issac John
Filed on November 1, 2013
Duís third-quarter profit surges 45%

Revenue, lower taxes help gains reach Dh474m in line with analystsí forecasts

Du’s third-quarter profit surges 45% (/assets/oldimages/du_0111213.jpg)Emirates Integrated Telecommunications Company, the UAE’s second-biggest telecommunications operator popularly known as du, on Thursday reported a third-quarter net profit of Dh474 million, an increase of 45 per cent year on year, on the back of a slight growth in revenue and lower taxes.

The net profit, up from Dh326.9 million in the year-earlier period, was in line with analysts’ estimates of Dh475 million.

In December 2012, the UAE announced changes to royalties, or tax, it levies on the telecoms sector, introducing a more complicated structure that would reduce the burden on du and etisalat, which are both majority-owned by state-linked institutions.

Du paid a royalty of Dh293.2 million, having made a pre-tax profit of Dh767.6 million, giving an effective tax rate of 38 per cent. In the year-earlier period, it provisioned to pay 50 per cent of its profit in royalties.

Quarterly mobile revenue rose 9.7 per cent year-on-year to Dh2.05 billion. Of this, Dh616 million came from data, with data income up by about a third from a year earlier, the telecoms operator said in a statement. Du increased its mobile customer base by 15.7 per cent from a year ago to 6.9 million subscribers as of September 30, giving it a market share of 46.4 per cent.

Of these mobile customers, 9.1 per cent were on monthly, or post-paid, contracts. These subscribers typically spend more on telecoms services and are less likely to switch provider.

“Growth during the quarter was driven by progress made in the data segment and a continuing strategy of attracting high-value customers,” du chief executive Osman Sultan said in the statement.

Despite this, du’s average revenue per user — a key industry metric — fell to Dh97 in third quarter, down from Dh99 in the second quarter of 2013.

Du’s margin on its earnings before interest, tax, depreciation and amortisation, another important industry indicator, was 40.2 per cent for the third quarter, up from 39.1 per cent in the year-earlier period.

According to Business Monitor International, or BMI, the UAE’s telecoms market recorded impressive revenue and subscriptions growth in the first half, reflecting strong business confidence and private consumption growth.

BMI forecast the uptrend “would continue for the most part of our forecast period, through to 2017, in view of the positive outlook for key sectors of the economy, including real estate and tourism, during the same period”.

According to BMI, the UAE mobile market grew by 4.3 per cent in the second quarter and 15.3 per cent in the 12 months to June 2013 to bring mobile penetration in the UAE to 178.7 per cent.

According to BMI data, the fixed-line sector grew by 1.7 per cent in second quarter and 6.3 per cent in the 12 months to June 2013. The fixed broadband sector grew by 2.4 per cent in second quarter and 7.8 per cent in the 12 months to June 2013.

The UAE telecoms industry is one of the major sectors in the state, as it contributes approximately five per cent to the country’s GDP. Mobile subscribers in the UAE is over 14 million, while total population stands at 8.3 million. Etisalat and du’s market capitalisation amounts to Dh 71.4 billion and Dh15.9 billion respectively.

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