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28 March 2024

Skype on the line with du for VoIP

Osman Sultan, Chief Executive Officer of du, says the telecom provider is committed to providing customers comprehensive and advanced services. (EB FILE)

Published
By Rebecca McLaughlin

Bullish. On the front foot. Optimistic. We had a pick of adjectives to describe the mood du (Emirates Integrated Telecommunications Co) CEO Osman Sultan was in yesterday, as he spoke to Dubai One presenter and host of the Emirates Business 24/7 TV show, Rebecca McLaughlin.

With du's first quarter profit rising four-fold, net income at Dh97 million and shareholder approval to raise Dh1 billion in a rights issue already in the bag, Sultan had the numbers to back the positivity.

Against this backdrop, Sultan discussed how du would stay profitable, share infrastructure with etisalat, keep pricing competitive and continue to talk to Skype for its Voice Over Internet Protocol (VoIP) plans. Excerpts from the interview:

Now that you have achieved profitability, is there any plan for overseas expansion?

We have indicated and we continue to indicate that there are no plans for du to expand as a business model overseas. We're focused on providing the best value for the UAE market. I think we have a lot to do.

Profitability quadrupled with strong subscriber numbers. Can this be sustained in the coming quarters? Can you outline for us, potential new revenue streams?

We are in a country of five million people. Now we have reached 3.75 million active subscribers via mobiles. Obviously, there is a limit to that, but I think that the tracks for growth in revenues are multiple… offering new services, customers with new behaviour. We are using our mobile phones in different ways. We're doing much more. Mobile broadband is in itself a track for growth and we intend to really fully play that field.

There are areas where du is still using etisalat infrastructure. How soon do you see du being fully independent?

Today on the mobile network we are using our infrastructure fully. We do have agreements, like any operator in the world, to have some interconnections. But that is not fully using the other network. On the fixed side and on the broadband, our intent as a country is to use more and to offer our infrastructure more to the other operator. I think that the intent is to have a track for growth that will be a milestone for this company, expanding the very comprehensive and very advanced value proposition we have, to customers nationwide. Take it to all the emirates and for that, I do not think that it would be wise to invest into digging put ducts, pull fibre (cables), and it would not be wise for the other company to do the same in the geographical area we cover. Infrastructure sharing is something that is now becoming more and more common. It allows us to really be more rational with investments, to be more careful in spending shareholder money. As a country we hope that this infrastructure sharing agreement will happen sooner than later and will allow us to grow our market presence.

The UAE still has comparatively high mobile and internet costs. When do you see prices easing and to what degree/percentage?

Telecommunications costs in the UAE are not among the highest. They are really average except for two areas – international voice calls and internet broadband prices – where they are at the high-end of benchmark. Yes, we see that once competition is stronger, prices will move slowly to the level that they will be offering the competitiveness that is needed. The infrastructure sharing agreement will allow competition to enter fully in the broadband market and will allow every customer to have a choice. Like what happened with mobile, you will see prices going down. Even now, on fixed international calls, you see prices that are really comparable with other markets.

Du is expected to pay the government a royalty. When will this payment begin?

We are waiting to see exactly what the mechanics of the royalty that we have to pay, are. I cannot comment on this because obviously this is not a negotiation. This is a decision of the authorities and we will obey this decision, of course.

VoIP – is du ready to announce a date for its launch?

We will be announcing VoIP soon. All our services offered today are based on the internet protocol. I think what people mean is the usage of VoIP for international calls. Once we do have some products and offers, you will see us announcing both for the consumer and business market.

Are there any specific players you're talking to?

We are talking to multiple players. If your question is, are we talking to Skype, then yes, we are talking to Skype. What will be the outcome of that? I think it's premature to discuss that.

Du gains okay for 571.4m rights issue

Telecommunications firm du said yesterday net profit before royalty in the first quarter more than quadrupled, driven by subscriber growth and beating analysts' forecasts, while the outlook for its fixed line business remained strong.

Du, owned partly by the investment company, Dubai Holding and Abu Dhabi investment vehicle, Mubadala Development Company, easily beat forecasts with its earnings, and one analyst said its ability to attract more mobile subscribers will ensure strong performance this year.

The firm also said it won shareholder approval for a 571.4 million share rights issue. The new shares will be priced at Dh1.75, a deep discount to its current stock price of Dh2.55 at Monday's close. Du said last month it would pursue a rights issue to fund infrastructure improvements beyond 2010. The operator, which recorded its first full-year profit in 2008, said in a statement net profit before royalty for the first quarter was Dh194 million, compared with Dh47m in the year-ago period.

Analysts in a Reuters survey in April forecast an average net profit of Dh97.2m. "The subscriber growth was the main driver behind du's highest mobile revenues for a quarter ever," the firm said in the statement. Du said it gained 262,000 mobile telephone customers in the three months to March 31, bringing its total active subscribers to 3.74m. "Outlook for our fixed line business remains strong with the prospect of a nationwide infrastructure agreement," the firm's Chief Executive Osman Sultan said.

Du's fixed line subscriber base grew to 456,700 lines in the first quarter from 310,900 lines in the same period last year.

"We were quite surprised by the number of mobile subscribers added during the quarter and the mobile usage," said Marise Ananian, Vice-President, Telecoms at EFG-Hermes in Cairo. "The company continues to surprise in terms of subscriber additions and is able to capture more of the market which it has been doing over the last year. We are expecting the company to continue its good performance." (Agencies)