Du revenue up, profit declines

The second biggest telecommunications operator made a net profit of Dh489.8 million in the three months to September 30, down from Dh558.7 million in the year-earlier period.

Emirates Integrated Telecommunications Company, known as du, on Tuesday declared its third quarter financial results, showing a modest increase in revenues but net profit declined by more than 12 per cent.  
The second biggest telecommunications operator made a net profit of Dh489.8 million in the three months to September 30, down from Dh558.7 million in the year-earlier period.
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The financial results missed analysts forecast as two analysts polled by Reuters had on average forecast du would make a quarterly profit of Dh521.3 million.  
"While overall revenue edged higher to Dh3.05 billion in the third quarter, a 16.7 per cent rise in the amount of royalty paid to the government more than outweighed this, meaning net profit after royalty declined on the year," commented Osman Sultan, du's chief executive officer. The operator had 7.28 million mobile subscribers as of September 30, down 3.2 percent from 12 months earlier.
Du attributed this to the effect of the UAE Telecommunications Regulatory Authority's 'My Number, My Identity' campaign, which required all users to register their mobile numbers to protect privacy and avoid fraud.
Du paid Dh481.85 million royalties in the three months to September 30, up from Dh413.04 million in the prior-year period. Last year, du paid 10 per cent of its regulated revenue - which excludes the likes of handset sales - and 25 per cent of its regulated profit in royalties.  
"The My Number My Identity (MNMI) campaign has also affected growth in our number of mobile customers, which in turn affected mobile revenue, however fixed and mobile data revenue maintained solid growth, allowing us to keep our overall revenue in line with previous years," Sultan explained.
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The soft launch last quarter of fixed-line infrastructure sharing in the UAE continues in a very controlled manner, he said, adding: "We remain extremely focused on providing the best possible assistance to all du customers, while retaining our focus on efficiency, cost control, and delivering good returns for our shareholders."
The telecom operator's year-on-year growth in fixed-line and data revenues was muted by lower mobile revenues. The company's mobile revenues declined 3.3 per cent YoY to Dh2.18 billion, lowering its contribution to total revenues to 71 per cent in Q3 2015 down from 74 per cent in Q3 2014.
"We believe the continued decline in mobile revenues reflects the saturation phase in the UAE mobile market," Mubasher Trade said in a research note.