du rings up bumper profit

Du's reported record fourth-quarter earnings of Dh912 million following a lower-than-expected royalty charge

A rise in mobile subscribers helped the UAE telecommunications operator du to post a record profit for last year's fourth quarter.

The company said yesterday its full-year profit quadrupled to Dh1.32 billion (US$359.3 million) while revenue rose 32 per cent to Dh7.07bn.

The company had net profit of Dh912m after royalty charges in the quarter ending in December, compared with Dh104.5m from the same quarter in 2009.

Fourth-quarter revenue of Dh2.04bn was 34 per cent higher than in the same period in 2009.

The profit includes a one-time gain of Dh481m - money that was set aside throughout the year but was included in the fourth-quarter earnings after the UAE Government announced that the operator would have to pay only a 15 per cent royalty charge last year instead of the 50 per cent charge du had expected. Etisalat is required to pay half of its profit in royalties to the UAE Government, a fee that the operator is seeking to have reduced.

Analysts polled by Bloomberg News had estimated that du would report revenue of Dh1.80bn and net profit of Dh358.6m during the quarter.

"We have the ability to show one of the highest, if not the highest, growth rates of any telecom company in this part of the world and in the most penetrated markets," said Osman Sultan, the chief executive of du.

The company added 252,000 mobile subscribers in the quarter, bringing its total customer base to more than 4.3 million. It gained 856,000 mobile subscribers last year and now has about a 40 per cent share of the UAE market.

It also added 45,500 fixed-line accounts during the quarter, an increase of 38 per cent from the year-earlier period, for a total of 561,000 fixed-line customers.

Mobile data and promotions helped to increase du's average revenue per user, a key telecoms statistic, to Dh125 last quarter from Dh112 a year earlier.

Mr Sultan said the company's financial position would give it a number of options on how to manage its debt. It has Dh3bn of debt maturing in June.

The company would boost its capital spending this year by Dh400m to Dh1.7bn, Mr Sultan said.

It is 39.5 per cent owned by Emirates Investment Authority, 19.75 per cent by Mubadala Development, a strategic investment company owned by the Abu Dhabi Government, and 19.5 per cent by Dubai Holding, with the remaining stake held by other shareholders.

Mr Sultan said the company had made "progress" in its discussions with the Telecommunications Regulatory Authority over sharing its fixed-line network with Etisalat as well as on mobile-number portability. Both services are to be introduced to UAE consumers this year.