x Abu Dhabi, UAEThursday 27 July 2017

No more Saudi expansion for du

Du has scrapped plans to expand into Saudi Arabia and will instead focus on increasing revenue from mobile data and offering enterprise solutions.

Du's offices in Dubai Media City. Profits have soared but a planned move into Saudi Arabia has been derailed. Charles Crowell for The National
Du's offices in Dubai Media City. Profits have soared but a planned move into Saudi Arabia has been derailed. Charles Crowell for The National

The telecoms operator du has scrapped plans to expand into Saudi Arabia and will instead focus on increasing revenue from mobile data and offering enterprise solutions to corporate customers, the company's chief executive said yesterday.

Emirates Integrated Telecommunications, du's full name, was looking to expand abroad through a mobile virtual network operator (MVNO) partnership in the kingdom, but it did not meet the required regulatory criteria to bid for a licence, Osman Sultan said while announcing the company's results.

"I have announced previously that we are looking at something interesting like an MVNO in Saudi ... we are not any more in this situation," Mr Sultan said.

MVNOs, or mobile virtual network operators, buy wholesale access to an incumbent operator's network and then market and sell telecoms products without having to invest in physical infrastructure assets.

Du announced that it planned to increase its annual dividend to Dh0.30 a share, double what it paid last year, as it posted a 71 per cent rise in fourth-quarter net profit.

Net income after royalty to the Government soared to Dh994 million (US$270.6m) from Dh440m in the previous year. That beat the Dh795m median estimate of three analysts, according to data compiled by Bloomberg.

The telecoms company also added almost half a million customers in the period, boosting its market share to 48.7 per cent.

The dividend announcement drew positive reactions from analysts.

"The most attractive part of the news is the 30 per cent cash dividend, which translates into a yield of above 8 per cent at last close," said Talal Touqan, the head of research at Al Ramz Securities. "The second booster was their market share."

Analysts at NBK said in a note that "we continue to view operational progress promisingly, as du continues to deliver on key performance indicators.

"We are particularly positive on the increased dividend payout, which in turn makes du an attractive dividend play."

Du also said it would invest about Dh1.7 billion in its network and operations this year and look to increase revenues in its enterprise business, offering services and IT solutions to corporate customers.

Talks between du and rival Etisalat on sharing fixed-line infrastructure are progressing slowly as the two companies currently have divergent views on the process, Mr Sultan added, without elaborating.

The upbeat results lifted du shares to the highest level since October 2008.

The shares closed at Dh4.12 on the Dubai Financial Market and were up 18.05 per cent for the year.

Four analysts recommend investors buy the shares, while five have a hold rating on the stock and one says sell, data compiled by Bloomberg shows.

 

* with agencies