The telecoms operator du reported a 19 per cent fall in first-quarter profit to Dh368.2 million compared with a year earlier, as higher product and network costs wiped out a small rise in revenues.
The company’s shares fell to a 15-month low on the results on Tuesday, closing down 3 per cent at Dh5.60.
Du’s revenue grew 2.5 per cent to Dh3.17 billion for the three months to the end of March, with growth in the company’s fixed line and wholesale businesses offsetting a small decrease in mobile revenues.
The number of mobile subscribers grew 3.2 per cent to 8.35 million at the end of March.
However Ebitda (earnings before income tax, depreciation and amortization) fell by 11.6 per cent to Dh1.23bn, owing to significant increases in interconnection, network and commission costs.
Osman Sultan, du’s chief executive, attributed the rise in network and interconnection costs to the operator’s change in revenue mix, with an increased focus on its wholesale connectivity business.
Wholesale revenues rose by 19 per cent year on year, compared with an 8 per cent rise in fixed revenues and flat mobile revenues.
Du’s mobile data revenue fell by 9.7 per cent for the quarter compared with Q1 2016. Mr Sultan attributed this to unusually high revenues stemming from a one-off promotion in the earlier period.
Mobile data accounted for 33 per cent of mobile service revenues during the quarter, marginally higher than in the fourth quarter.
Mr Sultan said in February that du was planning to cut costs by more than Dh1bn by the end of 2019 to counter the effect of static mobile revenues.
Speaking on a conference call with journalists on Tuesday, Mr Sultan said that the operator’s prepaid mobile division had shown disappointing results.
The division is continuing to struggle since the Telecommunications Regulatory Authority’s “My Number, My Identity” campaign led the operator to suspend about 1.1 million subscribers in 2015. Du’s parent company, Emirates Integrated Telecommunications Company (EITC), announced an agreement with Virgin Mobile in January, which will involve the operator launching services under the Virgin brand in a bid to stimulate prepaid revenues, especially among young smartphone users.
The Virgin Mobile brand was introduced in the UK in 1999 and is in use in more than 10 countries including Australia, Canada, Oman and Saudi Arabia, where it has more than 2 million subscribers.
Mr Sultan said that EITC would begin offering services under the Virgin Mobile brand “within weeks” after securing final approvals from authorities.
The operator’s royalty payment to the federal government for the quarter was down 10 per cent year-on-year at Dh486m, attributable to a lower regulated profit.
jeverington@thenational.ae
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