Du’s Q4 net profit doubles

UAE telecoms provider du’s fourth-quarter net profit more than doubled on strong revenue growth, driven by a jump in mobile and fixed line subscribers, and the results handily beat analysts forecasts.

Du said fourth quarter net profit before royalty jumped to Dh431 million ($117.3m) from Dh209m in the comparable period one year earlier. Revenue jumped 34 per cent to Dh2.05b for the quarter, du said in a statement on Thursday.

Analysts had forecast average quarterly profit of Dh152.38m in a Reuters poll. Fourth quarter profit after royalty was Dh912m, including the effect of the UAE federal government’s decision last month to slash the annual royalty fee du pays to 15 per cent of net profit for 2010.

That royalty rate is far below the 50 per cent analysts had expected it to pay and which its main rival Etisalat is levied. Du has been setting aside funds since 2008 to provision for the royalty fee. It was not required to pay the fee until it became profitable.

Du posted 2010 net profit before royalty of Dh1.23b and Dh1.31b profit after royalty.

The company, formally called Emirates Integrated Telecommunications Co, added 252,000 active mobile customers in the fourth quarter, giving it a nearly 40 per cent market share in the UAE, du chairman Ahmad Bin Byat said in a statement.

Its fixed line customer base climbed to 561,000 in the fourth quarter from 405,900 one year earlier. "We feel confident that we are entering 2010 on a strong footing and are well positioned to take advantage of new opportunities," CEO Osman Sultan said in a statement.

Du is partly owned by the ruler of Dubai's investment company Dubai Holding and Abu Dhabi-owned investment vehicle Mubadala Development Co.

Both du and telecom provider Etisalat will offer number portability by the end of March in a move seen stimulating competition in a saturated local market, the director general of the Telecommunications Regulatory Authority told reporters in January.

Du plans to expand its fixed-line operations across the country, putting more pressure on the Gulf's largest telecoms operator etisalat.

Dubai-based du broke etisalat's monopoly in 2007 and has been rapidly gaining ground on its larger rival, prompting etisalat to seek acquisitions to expand.

Etislat this week said it was still interested in Zain after it missed a due diligence deadline in its $12 billion bid to buy a controlling stake in the Kuwaiti company.

"We will expand our fixed business nationwide," Du Chief Executive Osman Sultan told reporters on Thursday after du said fourth-quarter profit more than doubled, driven by a jump in mobile and fixed-line subscribers.

Sultan said capital expenditure would rise to around Dh1.7 billion ($463 million) in 2011, from Dh1.3 billion last year.

The company - partly owned by the ruler of Dubai's investment company Dubai Holding and Abu Dhabi-owned investment vehicle Mubadala - also plans to boost its market share of mobile customers.

"In 2011, we will increase our market share in mobile," Sultan told reporters. "Our results show one of the highest growth rates in ... one of the most penetrated markets in the world.

"We expect growth (in data revenues) to be significant."

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