Du registers 15.5 per cent rise in second-quarter net profit

Net profit after royalty paid to the Government stands at Dh548 million.

A 30 per cent rise in du's revenue from its fixed-line business, along with a 10 per cent rise in mobile revenue has boosted its earnings. Sarah Dea / The National

The Dubai-listed telecoms operator du reported a drop in mobile subscribers during the second quarter even as earnings rose.

Du’s total mobile subscribers were 7.1 million at the end of the quarter, up 7.6 per cent year-on-year, but down 5.2 per cent from the first quarter of this year.

The telco said that the “My mobile, my identity,” campaign which requires subscribers to register their mobile numbers to avoid fraud, had led to a churn of 468,000 subscribers because unregistered numbers were withdrawn from the market.

Du also said that further “attrition” is possible in the coming quarters.

It reported a 15.5 per cent increase in its net profit for the period driven by a rise in mobile and fixed line revenue.

Net profit after royalty paid to the Government was Dh548 million. Revenue reached Dh3.02 billion, an increase of 13.7 per cent, compared with Dh2.66bn in the prior-year period.

“The highlight of the results is the strong Ebitda margin boosted by du’s outsourcing of certain functions, which creates manpower cost savings as opposed to hiring for those functions,” said Omar Maher, a telecoms analyst at the Cairo-based investment bank EFG Hermes.

Du said that a 30 per cent rise in the revenue from its fixed-line business, along with a 10 per cent rise in mobile revenue, has boosted its earnings.

“Mobile revenue [was] fuelled by an increase in post-paid customers,” du said in a statement.

The company said that its efficiency strategy was continuing to deliver, resulting in a reduction in overheads from this year’s first quarter.

The investment firm Shuaa Capital said that competitive pressures from Etisalat and the introduction of mobile number portability – a service that allows mobile users to switch between Etisalat and du while keeping their number – have taken their toll on du subscribers.

Etisalat has gained 400,000 subscribers during the second quarter, Shuaa said.

“We believe the strong market comeback that Etisalat saw in 2013 (64 per cent of net mobile additions) is still in place as we progress into 2014. We calculate a 60 per cent market share for Etisalat in the UAE mobile market, while du controls the remaining 40 per cent (down from the 45 per cent level last year), further evidence to the escalating competition in the marketplace,” said Shuaa.

Telecoms operators such as du are facing pressure on the voice side of their business as online apps such as Skype and Viber continue to increase in popularity.

But mobile and fixed data revenues have helped to drive earnings growth.

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