Lower government royalty payment offsets static revenues
Du parent reports second straight quarterly profit rise
Emirates Integrated Telecommunications Company (EITC), the holding company behind the Dubai-based telco du, reported higher third-quarter profits for the second consecutive quarter, as lower federal royalty fees offset static revenues.
The company’s profit rose 1.6 per cent year-on-year to Dh477.5 million for the three months to the end of September, ahead of an estimate of Dh455m from the Egyptian investment bank EFG-Hermes.
Royalty payments to the federal government, the company’s second-largest expense item, fell 4 per cent year-on-year to Dh515m.
Revenue for the period was unchanged at Dh3.1 billion, around 5 per cent below EFG-Hermes’s forecast, with mobile revenue falling 3.3 per cent to Dh2.3 bn.
“We remain on track with our strategy of attracting higher-quality customers and are pleased to report that the post-paid segment increased 14 per cent in Q3 2017, compared to the same period last year,” said Osman Sultan, EITC’s chief executive.
Mr Sultan said in a conference call yesterday that prepaid revenues had been particularly affected by the increased use of applications such as Skype for making calls.
The company did not give a breakdown of revenues or subscribers for Virgin Mobile, its youth-orientated brand it launched in September.
“Virgin Mobile is ramping very well. We are counting on Virgin Mobile...to offset part of the pressure that we’re seeing on some of the prepaid segments that we have but that will take some time,” Mr Sultan told reporters.
“We’re quite optimistic from that point of view.”
EITC this month announced the launch of its ICT Solutions division, geared towards the higher-margin delivery of managed IT and telecoms services to government and enterprises, as a means of offsetting sluggish fixed and mobile revenues.
The move follows the creation of a similar unit by fellow UAE telco Etisalat last year.
“Most of our growth in the years to come will come from non-connectivity business,” said Mr Sultan.
He added that previous levels of growth in the company’s mobile business was no longer feasible given the UAE’s high smartphone penetration rate.
In addition to its ICT Solutions division, EITC also created a digital lifestyle and innovation division to focus on “the development of innovative products and services for UAE consumers including video and smart home services.”
A third new Infrastructure division encompasses the company’s network, infrastructure and data centre operations.
EITC’s competitor Etisalat last week announced a 29 per cent rise in net income for the quarter, thanks to trimmed losses from its international operations.