Etisalat and du’s profits decline in Q1
Abu Dhabi-listed Etisalat reported a 8 per cent fall in first-quarter net profit on Tuesday.
Etisalat, which directly and indirectly operates in about 17 countries across the Middle East, Africa and Asia, made a net profit of Dh2 billion dirhams ($544.6 million) in the three months to Mar. 31, the company said in a statement.
This compares with a profit of Dh2.18 billion a year earlier.
Analysts at EFG Hermes and Sico Bahrain forecast the former monopoly would post a quarterly profit of Dh1.93 billion and Dh1.99 billion respectively.
Etisalat said its lower profit was due to factors including higher depreciation expenses and foreign exchanges losses in the quarter against currency gains in the corresponding period of 2015.
The profit fall came despite Etisalat generating first-quarter revenue of Dh12.85 billion, 1 per cent up from Dh12.73 billion a year earlier.
Etisalat had 165 million subscribers as of Mar. 31, down 1 per cent from the same point a year earlier. It cited disconnections which were a result of mandatory registration schemes in various markets.
Etisalat appointed Saleh Abdullah al-Abdooli as chief executive in March, after former head Ahmad Julfar resigned for personal reasons earlier in the month.
Du Q1 profit at Dh480.1m
Du, the United Arab Emirates' No.2 telecom operator, will continue to see weak revenue growth in the next two quarters and earnings from the mobile market are not enough to offset higher taxes, its CEO said on Tuesday after reporting a sixth straight drop in quarterly profit.
The company made a net profit of Dh480.1 million ($131 million) in the three months to March 31, down from Dh487.1 million a year earlier, it said in a statement.
Analysts at EFG Hermes and Sico Bahrain had forecast du would make a quarterly profit of Dh480.7 million and Dh501.6 million respectively.
First-quarter revenue was Dh3.09 billion, up 1.3 per cent on a year ago.
"I still see pressure on revenue growth, I see it continuing for the second and third quarters," du's Chief Executive Osman Sultan told reporters on a conference call.
Sultan said growth in the UAE's mobile market had declined since late 2014 and was insufficient to offset the increase in royalty - or tax - rates.
For 2016, du will pay 15 per cent of its regulated revenue - which excludes the likes of handset sales - and 30 per cent profit of its regulated profit in royalties. These taxes are up from 12.5 and 30 per cent respectively in 2015 and have steadily increased since 2012.
Du's first-quarter pre-tax profit rose 10.4 per cent year-on-year to Dh1.02 billion.
The company's quarterly mobile revenue slipped 0.9 per cent to Dh2.21 billion, with mobile data now accounting for 34 per cent of mobile revenues versus 30.9 per cent a year ago.
The company's profits have now fallen for six successive quarters year-on-year.
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