du announces revenues of Dhs908m in Q2

The company reported revenues of Dhs908m for the period ended 30 June 2008, an increase of 20% from the previous quarter (Dhs756m) and a 200% increase from the comparable quarter in 2007 (Dhs302m).

Mobile revenue was reported at Dhs670m, an increase of 20% from the previous quarter (Dhs560m) and a 341% increase from the comparable quarter in 2007 (Dhs152m). This has been achieved through the increased usage levels of existing mobile customers, in addition to the high subscriber acquisition levels achieved by the business and the unique offers and services introduced during this quarter.

Exceeding market expectations, du's total number of mobile customers at 30 June 2008 crossed the 2.3 million mark, an addition of 0.5 million in the quarter. In line with its announcement last quarter where active subscribers, as defined by the TRA, were disclosed for the first time, du is pleased to announce that its active subscribers reached 1.85 million at 30 June 2008, a quarter on quarter increase of 32% (1.4 million at 31 March 2008).

Fixed line revenues also continued to show significant growth and were reported at Dhs208m, an increase of 23% from the previous quarter (Dhs168m) and a 69% increase from the comparable quarter in 2007 (Dhs123m). This increase is a reflection of the continued expansion of the company's fixed line network, which has led to an 18% quarter on quarter increase in subscribers to 0.22 million (Quarter1 0.18 million).

Gross margin in the quarter was reported at Dhs568m (63%), an increase of 22% from the previous quarter (Dhs464m and 61%), and an increase of 252% on the comparable quarter of 2007 (Dhs161m and 53%). Gross margin improvements continue to be made by the business as economies of scale continue to be realised.

Ahmed Bin Byat, Chairman of du, said:

'I am confident that we will be able to surpass market expectations and deliver shareholder value earlier than anticipated. du has reported a steady financial growth over the first half of 2008 which we expect to continue for the remainder of the year.'

As reported last quarter management has remained focused on ensuring that growth is not achieved at the expense of efficiency; this has been demonstrated in limiting quarter on quarter growth in overheads to 16% whilst growing revenues by over 20%.

Osman Sultan, CEO, du, said: 'We are extremely pleased that we have been able to sustain this positive growth in both our revenues and EBITDA for this quarter, building on the success of the previous one. This guarantees we are firmly on track to achieve our forecasted results for the year earlier than anticipated'.

The company announced Earnings before Interest Tax Depreciation and Amortisation (EBITDA) of Dhs29m (3%) compared to an EBITDA of Dhs1.6m for the first quarter and a negative Dhs241m in the comparable quarter of 2007. This result gives a sound platform for achieving net profits in the coming quarters as well.

The overall results of the company for the quarter was a loss of Dhs44m compared with a loss of Dhs62m incurred in Q1 2008, a reduction in losses of Dhs18m quarter on quarter, and a reduction in losses of Dhs237m from the comparable quarter of 2007 (Dhs281m).

du continued its extensive capital expenditure programme, expanding both its fixed and mobile networks and invested a total of Dhs491m in the quarter, bringing year to date investment to Dhs888m.

The company has made rapid inroads into an already saturated market, with a host of innovative first to market services and products like pay by the Second, mobile TV, WoW card which offers customer the choice between more credit or more time, e-shop, video mail and call select. du has signed over 550 international roaming agreements with world-class operators in a record span of 18 months from service launch.

Key business developments in the past quarter include du's participation in the $700m Europe India Gateway (EIG), which will complement existing high bandwidth cable systems in the region, and provide much needed diversity for broadband traffic currently relying largely on traditional routes from Europe to India. This would allow the company to offer higher capacities at more affordable prices.