Du net profit falls as mobile subscriber base shrinks

Du, the UAE’s No. 2 telecom operator, reported a 0.6 per cent fall in first-quarter profit on Tuesday, missing analysts’ estimates as it paid a higher royalty rate than a year earlier and its mobile subscriber base shrunk slightly.

The company, which ended rival Etisalat’s domestic monopoly in 2007, made a net profit of Dh487.1 million ($132.6 million) in the three months to March 31, down from Dh490.3m in the year-earlier period.

Three analysts polled by Reuters had on average forecast du would make a quarterly profit of Dh564.7m.

First-quarter revenue was Dh3.05 billion, down from Dh2.96b a year earlier.

Du paid royalties of Dh437.9m in the first three months of 2015, up from Dh375m in the prior-year period.

For 2014, du paid 10 per cent of its regulated revenue and 25 per cent of its regulated profit in royalties to the federal government. These have increased to 12.5 and 30 per cent, respectively, this year.

The term regulated refers to services that are within the remit of the UAE’s telecom regulator and excludes the likes of handset sales.

Du’s quarterly mobile revenue was Dh2.24b, compared with Dh2.23b a year earlier.

The operator had 7.48 million mobile subscribers as of March 31, down 0.9 per cent from 12 months earlier, a drop du attributed to a government-led campaign to re-register mobile accounts.

First-quarter mobile data revenue rose 14.4 per cent to Dh715.6m, accounting for 30.9 per cent of mobile revenue, which is up from 27.6 per cent a year ago.

Quarterly fixed revenue rose 20 per cent year-on-year to Dh616.1m, but wholesale revenue fell 12.5 per cent to Dh151.3m over the same period.

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