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Repayment of $816m by du boosts its shares

Du repays a Dh3 billion loan to a syndicate of 16 banks, the telecoms operator said on Sunday.

The telecommunications operator du has repaid a Dh3 billion (US$816.7 million) loan to a syndicate of 16 banks.

It cleared the dual-currency syndicated loan using a combination of existing financing facilities and cash, the company said yesterday in a statement to the Dubai bourse.

Shares in the company, which are traded on the Dubai Financial Market, yesterday rose by 2.9 per cent on the back of the news, closing at Dh3.20.

Osman Sultan, the chief executive of du, said the operator was "pleased to be in a such a strong position to repay this facility using the most efficient resources available to our company".

The financing arrangement, taken out in 2008, was the first debt offering by the company. It was used for the expansion of the operator's network in the UAE.

Last month du said it had secured a $220m three-year loan, part of which was used to pay off the Dh3bn loan that matured on Thursday.

Matthew Reed, an analyst in Dubai with Informa Telecoms & Media, said the news was positive for du.

"Financially it has been doing well. There are reasons to have a positive view on the company," he said.

However, he added "there are hurdles coming up that it needs to cross".

One is the roll-out of a next-generation mobile network, which will offer faster data connection speeds. "They can't really afford to be left behind by Etisalat," Mr Reed said.

The UAE's two telecoms companies are set to enter a new era of competition with the delayed introduction of fixed-line infrastructure-sharing, under which Etisalat and du will compete to offer broadband and landline subscriptions across the entire UAE.

The monopoly held by the incumbent Etisalat was broken by du when it launched services in 2007.

Du currently controls almost 42 per cent of the UAE mobile market, having gained significant market share from Etisalat. In the first three months of this year, du added 272,000 active mobile subscribers, while Etisalat said it lost 334,000 subscribers during the same period.

Nomura recently said du was "well placed to continue to take share from Etisalat". It left its target share price for the company unchanged at Dh3.49.

In the same report Nomura reduced its share-price target for Etisalat to Dh12.10 from Dh13.60.

 

bflanagan@thenational.ae

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