Du reports fourth consecutive quarterly profit decline

Du, the UAE’s second biggest telecommunications operator, reported a 12.3 per cent fall in third-quarter net profit.

Du expects 50 per cent of its mobile revenue to come from data over the next couple of years, while it looks to add customers following massive cancellations.

The Telecom Regulatory Authority has disconnected more than 1 million du subscribers so far this year as part of the “My Number My Identity” campaign that requires customers to register their mobile numbers to protect privacy and avoid fraud.

Du’s mobile phone subscribers fell by 3.2 per cent in the third quarter to 7.28 million.

"This is not something that is business as usual," said Osman Sultan, du's chief executive. "The year has been marked by this exceptional thing and we need to get back [to growth] as quickly as possible."

Meanwhile, data contribution to mobile revenue stood at 32.9 per cent during the third quarter, an increase of 7.8 per cent from a year earlier.

Net profit however fell 12.3 per cent in the third quarter because royalty fees to the government weighed on earnings.

The company, which ended Etisalat’s monopoly in 2007, said that net profit was Dh489.8 million in the three months to September 30. The profit is after du had provisioned 16.7 per cent of its net income as royalty to the government.

Du had also reported declining profits in the preceding three quarters. But, revenue for the third quarter climbed 0.4 per cent from a year earlier, reaching Dh3.05bn.

“No major surprises, the results are exactly in line with our estimates at all levels,” said Omar Maher, a telecom analyst at Cairo-based EFG-Hermes.

Yet, he added that a 2 per cent quarter-on-quarter decline in earnings was largely due to “seasonality” given that the third quarter is typically the weakest quarter of the year on the back of slow usage in Ramadan and expats leaving the country for summer holidays.

“The only surprise was the fact the mobile subscriber base continued to shrink due to the telecom regulator’s campaign “My Number My Identity”, and the reason why it was surprising is because we did not see the same thing in Etisalat this quarter,” said Mr Maher.

Last month, du and Etisalat began competition over fixed voice and broadband services. The two operators said that they would be expanding their services to the areas of the country where each had previously operated exclusively.

Mr Sultan said that he did not expect price competition with Etisalat over home services to hit the company’s revenue.

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