Dubai's Du 1Q Net Pft +13% on Higher Data Revenues

Saturday, May 04, 2013

(This story was originally published Thursday.)

DUBAI (Zawya Dow Jones)--Dubai's Emirates Integrated Telecommunications Co. (DU.DFM) said first-quarter net profit before royalty increased 13% as revenues from mobile and data services surged.

The telco, better known as Du, made a first-quarter net profit before federal royalty of 752 million U.A.E. dirhams ($204 million), compared with AED666 million a year earlier, Du said in an emailed statement. After royalty payment to the government, net profit in the latest three-month period jumped 40% to AED468 million.

Revenue for the first quarter was up 11% to AED2.63 billion after mobile revenue increased 11% to AED2 billion and mobile data revenue was up 33% to AED520 million. Despite the strong increases in both revenues and operating profits year-on-year, the first-quarter results represented the first time the telco's operating profit had fallen on a quarter-by-quarter basis in over a year, according to company data.

A new royalty rate structure was set in December by the U.A.E. federal government for the five years from 2012 to 2016 for Du and rival operator Etisalat. The U.A.E. Ministry of Finance said Du will be required to pay 5% of its revenues and 17.5% of net profit earned from its U.A.E. operations for the 2012 year, rising to 15% and 30% respectively by 2016, drawing it into line with rates paid by Etisalat. The details of how the revenue part of the royalty rate would be counted were still being discussed with the Ministry of Finance, Du said at its full-year results announcement in February.

For the first quarter, Du said its mobile subscriber base grew by 182,000 users to 6.6 million, compared with the fourth quarter of last year, representing 48.1% of the market in the United Arab Emirates, according to estimates from the Telecommunications Regulatory Authority. The first-quarter market share represents a decline compared to the end of last year, when Du said it was 48.7%.

In the past year, Du has been examining ways to cut costs and said total overheads in the first quarter were AED698 million, a decrease of 9.2% from the same period a year ago.

"Our emphasis on optimising operational efficiencies contributed to a significant reduction in overheads year on year," Osman Sultan, chief executive of Du, said in the statement. "As we have communicated, efficiency and cost control will remain a strategic driver throughout 2013 and beyond, while rapidly evolving consumer requirements and technology advances will continue to drive our investment programmes."

The company invested AED368 million in network infrastructure in the first quarter, it added in the statement.

Write to Rory Jones at rory.jones@dowjones.com

(END) Dow Jones Newswires

04-05-13 0654GMT