UAE's appetite for smartphones and mobile internet boost du profits

Du's profits are up by more than a third, as its base of mobile customers nears 6 million and revenues from smartphone data almost doubles.

Osman Sultan, the Chief Executive Officer of du, his company today said mobile internet was driving up profits.Jeffrey E Biteng / The National
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Du's profits are up by more than a third, as its base of mobile customers nears 6 million and revenues from smartphone data almost double.

The Dubai-listed telecommunications operator yesterday said its net profit before royalty had risen to Dh654 million (US$178m) in the third quarter, a 33.8 per cent rise over the same period last year.

Because du provisions 50 per cent of its bottom line to cover a payment due to the UAE Government, it will record a net profit after royalty of Dh326.9m.

The royalty fee is usually set at the beginning of the new year.

Smartphone-internet connections represent one of the fastest-growing parts of du's business, with mobile-data revenues hitting Dh323m during the third quarter, up 93 per cent on the same period last year.

Total revenues increased by 12.9 per cent year-on-year to reach Dh2.52 billion, the company said. That was slightly below analysts' expectations.

The company also continues to increase its mobile-subscriber base. Du has 5,960,700 active mobile customers, a 20.7 per cent increase on the same period last year, and a 4 per cent increase on the previous quarter. Du said its share of UAE mobile customers is 47.2 per cent, with its competitor, Etisalat, holding the majority of the market.

The company also said it had added 26,300 post-paid mobile customers, who typically spend more on their monthly bills.

"The number of high value post-paid customers we serve increased 39 per cent year on year, and now represents nearly 8 per cent of the total customer base," said Osman Sultan, du's chief executive.

Matthew Reed, a senior analyst at Informa Telecoms & Media in Dubai, said the results were "sound", pointing to the rises in du's mobile subscription count, higher-value postpaid subscribers and in mobile data revenues.

However, Mr Reed also said that du's average revenue per user (ARPU) was falling.

This key indicator of the mobile business had declined to Dh110 a month in the third quarter of the year, du said.

"Du's mobile ARPU is down slightly, reflecting the fact that the UAE mobile market is increasingly mature and competitive. Net profit has been flat for the past three quarters - though has risen year-on-year - as a result of higher costs," said Mr Reed.

Du also reported a 0.5 per cent decline in its fixed-line revenues, which amounted to Dh408 million in the third quarter compared with Dh410 in the second. "The reasons for this are unclear, but of course du continues to be restricted by the lack of competition in the UAE's fixed-broadband market," Mr Reed said.

Petr Molik, the head of the research division at Mena Corp, said that du's ARPU figures were "disappointing".

"[This is the] third consecutive quarter of decrease in ARPU. It will rebound in the fourth quarter because it is the strongest quarter, but it will be closer to Dh115 than Dh120," he said.

Mr Molik said du's results were "roughly in line with expectations".