Du announces third quarter 2009 results

Highlights for the third quarter:

• 3,139,100 active mobile subscribers at quarter end, up from 2.1 million versus Qtr 3 2008 (a 51% increase)

- 233,200 net active mobile additions during the quarter
- 25,900 net increase in post-paid mobile additions in Q3.

• Revenues for the quarter of Dhs1,332.9m consistent with the previous quarter and up 25.8% vs Q3 2008.

• EBITDA of Dhs297.3m, representing an increase of 22.8% vs Q2 09 (Dhs242.1m), and 192.9% vs Q3 08 (Dhs101.5m).

• Net profit (before royalty) of Dhs157.1m for the quarter a 398% outperformance vs Q3 08 and up 36% vs Q2 09.


Commenting on the results, Ahmad Bin Byat, Chairman of Du, said:

"We are pleased with the results for the quarter. Again, Du has shown that it is the preferred mobile provider in the country with its impressive performance this quarter in terms of its new customer's additions and its overall financial performance."

"In a challenging economic environment, Du continues to focus on its core business objectives, our customers, by providing continual upgrades to our network infrastructure and product range in order to bring continued customer satisfaction on all interactions with the company. Both profit and subscriber number growth is a clear indication that we have a robust business strategy," he added.

Osman Sultan, Du's Chief Executive Officer, said, "Du has maintained its growth strategy and remains Emirates focused, as well as securing further market share. Du has seen continued growth of mobile subscribers with 233,200 additional net subscribers added for the quarter. Despite seasonal influence Du has maintained positive profit and EBITDA growth demonstrating Du's commitment to both customers and shareholders. During the quarter Du has continued to enhance both network coverage and product range with the launch of the Du 'Business Super Plan' a new mobile plan for Small to Medium Enterprises, as well as enhancing our network coverage throughout the UAE."

"Du continues to provide market leading information on our active customer base especially with regards to our pre- and post-pay mobile subscriber additions. This reinforces a strengthening in these business segments with post paid attracting 25,900 subscribers during the quarter. Our vision is to provide superior network capabilities as well as competitive products and services and as such our investment programme for our network capabilities are in line with our strategic capital expenditure program for 2009 where we are on target to invest around Dhs2bn and expect to spend a similar amount on Capex during 2010," he added.

Q3 2009 results analysis

Revenues remained steady during the quarter and are comparable to Q2 at Dhs1,332.9m. Revenue performance across our fixed and mobile segments was positive with mobile providing the largest gains with increased subscriber numbers. Revenue growth was seen across all business segments, with the exception of the wholesale which was highlighted in Q2 09 as being exceptional.

Revenues for Du's fixed business, including fixed telephony, TV and Broadband, totalled Dhs241.6m from 358,000 lines compared to Dhs242.6m Q2 09 and Dhs211.8m during the same quarter in 2008.

Combined revenues of Dhs1,332.9m showed an increase of 25.8% compared to the same time last year (Dhs1,059.6m). The mobile sector provided the strongest revenue with growth of 28.8% compared to the same period last year.

Total active mobile subscribers increased to 3.139 million with 233,200 subscribers additions during the quarter. Mobile revenues for the quarter again reached record highs achieving Dhs940.6m an increase of 6.7% over Q2 09 (Dhs881.6m) and 29% year on year (Dhs729.6m).

During the third quarter Du's pre and post paid mobile subscriber numbers saw continued growth with the addition of 25,900 post-paid mobile subscribers, representing a 55% increase in subscriber additions over the second quarter as a result of continued marketing strategy to increase market share. Post-paid customers represent 3.6% of Du's mobile business. Pre-paid mobile subscribers also increased with an additional 207,300 subscribers added for the quarter.

Total overheads decreased to Dhs579m in the quarter, compared with Dhs620.9m in the previous period. This is a result of Du's continued focus on cost controls and driving efficiencies, the percentage of costs to revenue fell from 47% in Q2 to 43% in Q3.

Earnings Before Interest, Tax and Depreciation (EBITDA) increased to Dhs297.3m up 23% compared to Q2 09 of Dhs242.1m and a significant increase to the same period in 2008 of Dhs101.5m or 193%. This represents 22% of revenues, up from 18% of revenues in the second quarter of the year, again highlighting Du's effective cost control management.

Net profit before Royalty for the quarter was Dhs157.1m corresponding to a 36% increase from the previous quarter and an impressive 398% increase when compared to Q3 2008.

Du's ongoing capital expenditure (CAPEX) programme is on track to exceed Dhs2bn in 2009, with Dhs424m accounted for during Q3 2009 bringing year to date expenditure to Dhs1466.7m. The CAPEX programme is fundamental to Du's ongoing growth strategy and is resulting in enhanced network capabilities, as well as continued competitive products and services. du expects to continue with its CAPEX programme and expects to commit an additional Dhs2bn during 2010.