Du Reports Q3 Profit Rise Of 45%

Du, the United Arab Emirates’ number two telecommunications operator, reported a 45 per cent increase in third-quarter profit on Thursday, roughly in line with analysts’ estimates as revenue rose slightly and it paid a lower taxes.

The firm, which ended rival Etisalat’s domestic monopoly in 2007, made a net profit of Dhs474.3 million ($129.13 million) in the three months to September 30, up from Dhs326.9 million in the year-earlier period.

Analysts polled by Reuters on average had forecast du would make a quarterly profit of Dhs478.1 million.

In December 2012, the UAE announced changes to the royalties, or tax, it levies on the telecom sector, introducing a more complicated structure that would reduce the burden on du and Etisalat, which are both majority-owned by state-linked institutions.

Du paid a royalty of Dhs293.2 million, having made a pre-tax profit of 767.6 million, giving an effective tax rate of 38 per cent. In the year earlier period, it provisioned to pay 50 per cent of its profit in royalties.

Quarterly mobile revenue rose 9.7 per cent year-on-year to Dhs2.05 billion. Of this, Dhs616 million came from data, with data income up by about a third from a year earlier.

Du increased its mobile customer base by 15.7 per cent from a year ago to 6.9 million subscribers as of September 30, giving it a market share of 46.4 per cent.

Of these mobile customers, 9.1 per cent were on monthly, or post-paid, contracts. These subscribers typically spend more on telecom services and are less likely to switch provider.

“Growth during the quarter was driven by progress made in the data segment and a continuing strategy of attracting high-value customers,” Osman Sultan, du chief executive, said in the statement.

Despite this, du’s average revenue per user (ARPU) – a key industry metric – fell to Dhs97 in third quarter, down from Dhs99 in the second quarter of 2013.

Du’s margin on its earnings before interest, tax, depreciation and amortisation (EBITDA) – another important industry indicator – was 40.2 per cent for the third quarter, up from 39.1 per cent in the year-earlier period.