Du outperforms rival on subscribers

Du's second quarter results show the company has taken a clear lead in new mobile subscribers.

A du billboard in central Abu Dhabi. The company has taken a clear lead in new customer acquisitions.

The telecommunications company, Du, has taken a clear lead in new customer acquisitions in the UAE, signing up more than twice as many mobile subscribers as Etisalat in the second quarter. In the three months to June, Du added 500,000 customers, bringing its total number of subscribers to 2.3 million. Etisalat added 200,000 in the same period. "The right value proposition is creating momentum," said Osman Sultan, the chief executive at Du. "Do not underestimate the importance of being better value for money." The company now has an almost 60 per cent share of new customers this year, despite holding less than 30 per cent of the total market.

Analysts said an aggressive price-based campaign for new subscribers contributed significantly to the numbers. But the campaign, and others like it, has also contributed to a large number of inactive customers, who have not made or received a single call or text message in the past three months. Of the company's 2.3 million total subscribers, 20 per cent were reported to be inactive, a figure considered high for the industry. Etisalat has not yet reported active customer numbers. Mr Sultan said he expected the percentage of inactive customers to decrease as new subscribers were added. "We have been carrying a large number of inactive customers from the very beginning," he said. The company's number pre-booking offer led to many people reserving "their" number on Du's network, but keeping their Etisalat connection as their main line. "Our challenge is to make sure that over time, these people make Du their primary network," Mr Sultan said. The company's revenues from fixed-line subscribers now account for more than 20 per cent of total revenues. With the Telecommunications Regulatory Authority (TRA) mandating further liberalisation of fixed-line telephone through its carrier preselection policy, the segment is one that Du hopes to grow in. "It will be a breakthrough," said Mr Sultan. "It will allow us to provide seamless triple play [voice, internet and television] services nationwide, which is something we can't do today." He added that he thought it unlikely that the "very complicated" technical work needed to implement carrier preselection would be completed by the end of the year, the date initially communicated by the TRA. In quarterly results published yesterday, the company posted a Dh43.8 million (US$11.9m) loss, a slight improvement on analysts' expectations. In statements following its launch last year, Du said it expected to become profitable by the end of next year. Mr Sultan now expects this point to come almost one year early, an expectation echoed by analysts. "Being conservative, I estimate the first quarter of 2009 to be positive," he said. "It might be even the last quarter of 2008." @Email:[e-mail]