Du's Q1 profit slides on weaker mobile business

The company's mobile subscribers fell by 13.5% to 7.4 million

EITC's revenue fell 4.8 per cent year-on-year to Dh2.99bn in the first quarter. Charles Crowell / The National
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Emirates Integrated Telecommunications Company, also known as du, reported a 21 per cent year-on-year decrease in its first-quarter net profit as the company experienced a dip in mobile subscribers.

Net profit after royalties for the three months ending March 31 declined to Dh355 million, the company said in a statement on Tuesday. Revenue fell 4.8 per cent year-on-year to Dh2.99 billion. The telco said results were hit by the impact of Covid-19 during the month of March.

“We are now living through uncertain and unprecedented times,” said Johan Dennelind, chief executive of EITC.

“At EITC, we are working hard, our contingency plans have been activated and we have implemented a raft of measures to protect our people and our operations. Financially, we are taking proactive cost optimisation measures to manage the erosion of revenues, which is being driven by a reduction in mobile and other revenues."

The company’s mobile subscribers declined 13.5 per cent annually to 7.44 million, but fixed-line subscribers increased 7.9 per cent year-on-year to 224,000.

Mobile revenue, which decreased 9.3 per cent to Dh1.5bn in the quarter, came under pressure due to movement restrictions put in place across the country, the telco said.

“It led to a shift towards fixed usage that affected particularly the company due to the importance of prepaid in its revenue mix,” the company said.

Fixed-line revenue increased 5 per cent to Dh641m.

The company is expecting an even greater impact on revenue as a result of the coronavirus pandemic in the second quarter of the year.

Not only will restrictions on movement to prevent the spread of the virus continue to affect mobile revenue, it will also limit sales activity and lead to a "strong reduction" in income received from tourists using its network, the company said.

“Going forward, and similar to many other companies in the UAE and globally, we expect to see a material negative impact on our operations and financial results as a result of Covid-19 disruptions … in particular due to the mix of our base towards higher prepaid share and lower fixed share,” said Mr Dennelind.

During the first quarter, the company allocated Dh310m - 10.4 per cent of its revenue – on capital expenditure to facilitate network rollout, capacity upgrades, regular network maintenance and digital transformation initiatives.

Founded in 2005 as the UAE’s second licensed telecommunications provider, the company is 50.12 per cent owned by Emirates Investment Authority, 10.06 per cent by Mubadala Investment Company and 19.7 percent by Emirates International Telecommunications, with the remainder of shares in public hands.