du's Q1 profit before royalty up 10.4pc

Dubai - The net profit after royalty stood at Dh480.1 million due to an increase in year-on-year royalty of 23.6 per cent.

Emirates Integrated Telecommunications Company, or du, reported on Tuesday that its first quarter net profit before royalty grew 10.4 per cent to Dh1.02 billion on a revenue growth of 1.3 per cent to Dh3.09 billion.
The Dubai-based telecom operator said its net profit after royalty stood at Dh480.1 million, down from Dh487.1 million in 2015, due to an increase in year-on-year royalty of 23.6 per cent.
While mobile revenue totaled Dh2.21 billion, a 0.9 per cent decrease on the same 2015 quarter, (Dh2.23 billion), mobile data revenue increased by 8.9 per cent to Dh779.0 million from Dh 715.6 million in the same 2015 quarter. Fixed revenue climbed 2.3 per cent to Dh630.3 million from Dh 616.1 million. Mobile data now represents 34 per cent of mobile service revenues compared to 30.9 per cent a year ago, du said in a statement.
Analysts at EFG Hermes and SICO Bahrain forecast du would make a quarterly profit of 480.7 million dirhams and 501.6 million dirhams respectively. 
Osman Sultan, du's Chief Executive Officer, said the operator continued to make progress during the quarter, delivering the right mix of products and services to the market, and ensuring an even better customer experience. "Operationally, we are executing our strategy at speed at a time when demand for digital services and data is growing rapidly."
He said data has become a cornerstone of du's business and the appetite for connectivity remains robust. Mobile data revenue increased during the first three months of the year, while total data usage grew exponentially during the same period.
"With a growing mobile subscriber base of more than eight million, it is clear that our customers appreciate the value of du products and services. Quality growth remains a key focus for du and a 10.1 per cent year-on-year rise in the number of postpaid subscribers in the first quarter shows our strategy is on the right track," said Sultan.
He said du would continue to align its business with the UAE's Smart Government initiative in accordance with Vision 2021. "We see Smart City as a vital component of the UAE's drive to become a leading integrated technology provider. We are truly excited by the opportunity to help make this a reality."
Du said recently that it did not expect royalty rates to change next year. Both du and its rival Etisalat will pay 15 per cent of their regulated revenue - which excludes the likes of handset sales - and 30 per cent of their regulated profit in royalties this year.
Du is seen as the next candidate for an increase in its foreign ownership limit in the Middle East and North Africa telecom space after Etisalat increased its limit to 20 per cent in September 2015, according to investment bank Arqaam Capital.
Arqaam said in a recent strategy note that it expects the increase in liquidity of du shares as a result of lifting foreign ownership restrictions would be enough for it to qualify for the MSCI Emerging Markets Index after 12 months if it were to lift the foreign ownership for institutional investors.
Sultan had hinted out in its note that the telecom operator remained open to the possibility of a change in foreign ownership restrictions. issacjohn@khaleejtimes.com