Telecoms operator du reported a 38 per cent fall in net profit for the first half of the year as it said revenues were hit by "movement restrictions, low business activities and [a] shift in customer behaviour" due to Covid-19.
The company declared a net profit of Dh570m for the six-month period, compared to Dh913.3m in the same period a year ago.
Revenue was Dh5.66bn, 11 per cent lower year-on-year. Mobile revenues, particularly in the second quarter, were lower as companies implemented work-from-home initiatives and people relied more on fixed line connections.
“Despite a challenging environment that adversely impacted our results for the quarter we continued our transformation programme, particularly on the digital front, and we remain committed to continue investing in our business to sustain long-term value creation," said Mohamed Al Hussaini, chairman of du's holding company Emirates Integrated Telecommunications.
The company increased its capital expenditure by 75.3 per cent in the six-month period to Dh819m, which equates to about 14.5 per cent of its half-year revenue, Mr Al Hussaini said.
“During Q2 2020 we focused our efforts on managing the impact of the Covid-19 crisis by ensuring the provision of uninterrupted connectivity and service for all our customers across the country, while protecting the health and safety of our employees and customers," said the company's chief executive, Johan Dennelind, who was appointed earlier this year.
"We refined our contingency plans to cope with the evolution of the situation and to prepare the company for the gradual ramp-up of the economic activity as lockdown restrictions are being eased across the country."
Founded in 2005 as the UAE’s second licensed telecommunications provider, EITC is 50.12 per cent owned by Emirates Investment Authority, 10.06 per cent by Mubadala Investment Company and 19.7 per cent by Emirates International Telecommunications, with the remainder of shares in public hands. Alongside du, the company also owns the Virgin Mobile brand in the UAE.
The pandemic has caused short-term pain which has led to it embarking on a cost efficiency programme that has seen it cut marketing spend, renegotiate contracts and optimise current resources, which Mr Dennelind expects to feed through to its results in the second half of this year.
However, it has also "demonstrated the relative resilience of our model as a vital sector for the economy and confirmed the need to accelerate our transformation towards more digitalisation, higher efficiency and further technology developments", Mr Dennelind said.
"Going forward, we expect to see a stabilisation and a gradual pick-up in economic activity in H2 2020, particularly as movement restrictions are being eased across the country, more and more people are returning to the office and tourists are starting to come back.
"We will continue to see severe impact on our year-on-year results but we expect to recover on a sequential basis for the rest of the year," he said.
