x Abu Dhabi, UAEWednesday 17 January 2018

A ringing endorsement from du

The operator has steadily eaten into Etisalat's mobile business since it launched in 2007 and believe they have passed a 'significant milestone'.

Osman Sultan, the chief executive of du, whose mobile subscriber base has grown beyond 4 million.
Osman Sultan, the chief executive of du, whose mobile subscriber base has grown beyond 4 million.

Competitive offerings in the mobile market have helped du post record profits in its third-quarter earnings.

The UAE's second telecommunications operator has steadily eaten into its rival Etisalat's mobile business since it launched in 2007. In the third quarter, du added 159,800 new mobile subscribers, bringing its total customer base to more than 4 million users, equal to a 37 per cent share of the market.

By comparison, Etisalat added about 10,000 mobile subscribers in the third quarter to reach a customer base of 7.8 million.

"We have passed a significant milestone with our active mobile subscriber base growing beyond 4 million," said Osman Sultan, the chief executive of du.

Net profit after royalty charges was Dh163m (US$44.3m) in the quarter ending on September 30 compared with Dh78.5m for the same period a year earlier, du reported yesterday.

That was slightly better than analysts' expectations in a Bloomberg poll of Dh148m.

The operator also posted revenues of Dh1.74bn during the quarter, a 31 per cent increase on the same period last year and above analyst expectations of Dh1.7bn.

The company stands to gain more ground against Etisalat over the next year when it gains access to Etisalat's nationwide broadband network.

According to a recent report by JPMorgan, once the two operators share networks, du's broadband margin could be as high as 30 per cent.

Mr Sultan said du was still "fine-tuning" the network sharing arrangement with Etisalat, although the Telecommunications Regulatory Authority (TRA) announced last August it was "technically feasible" for the operators to connect to each other.

Some 15,500 new "fixed-line" customers were also added to du's 515,400 subscribers in the third quarter. Fixed-line incorporates du's internet, television and landline phone customers.

But Mr Sultan warned that the UAE's telecoms industry was reaching saturation point, which would impact both du and Etisalat.

"You cannot sustain the trend in net additions that we had in 2008 and 2009. The net subscribers is reaching a plateau," he said.

"We grew last year, a year of economical uncertainty, at 36 per cent, the highest growth rate for any telecoms operation in this region. This year, we will end the year around 30 per cent. I don't expect us to be in the 30 per cent range next year because its not sustainable."

Mohammed Hamdy, a telecoms analyst with CI Capital Holdings in Cairo, said du managed to surpass the company's expectations through its strength in attracting mobile customers away from Etisalat. "Overall, we think du's performance is encouraging since the company continued to deliver double-digit growth in revenues, higher mobile average revenue per user and wider market shares in both mobile and fixed-line markets," Mr Hamdy said.

The company is also positioning itself to take a leadership role in shaping what it has described as a "digital voice for the Middle East", with a web portal called Anayou.

Launched last month, Anayou offers digital content tailored for the Arab world, including music, videos, gaming and news as well as a social network similar to Facebook.