Du announces first quarter 2013 results

Osman Sultan, Du's Chief Executive Officer, said, "The quarter saw a solid performance across all areas of the business, with a double digit rise in total revenues on the same period in 2012. Growth in mobile data revenues reflects the ongoing shift in network traffic from voice to data, a trend we expect to continue, consistent with sector developments worldwide. Our strategic emphasis on market segmentation resulted in an increase in revenues from the postpaid customer segment, as a percentage of total mobile revenues, and we will remain focused on building this high-value customer base through relevant product offerings and an enhanced service experience."

He said, "Our emphasis on optimising operational efficiencies contributed to a significant reduction in overheads year on year. As we have communicated, efficiency and cost control will remain a strategic driver throughout 2013 and beyond, while rapidly evolving consumer requirements and technology advances will continue to drive our investment programmes."

He added, "As our company moves to maturity we will continue to demonstrate our commitment to delivering value to our shareholders through retaining our position as the operator of choice, fostering innovation, our ongoing focus on efficiency and our ability to generate cash."

Q1 2013 results analysis:

Du delivered a stable revenue performance in the first quarter, with total combined revenues for Q1 2013 reaching Dhs2.63bn, representing an increase of 10.73% year on year (up from Dhs2.37bn) and a 0.85% decrease quarter on quarter (from Dhs2.65bn).

- Stable performance in mobile revenues

Mobile revenues increased by 11.13% year on year, reaching Dhs2.06bn, compared to Dhs1.85bn in Q1 2012, and saw a slight decrease of 1.65% on last quarter's mobile revenues of Dhs2.09bn. Revenue growth was supported by strong additions across all customer segments.

During the first quarter of 2013, Du strengthened its position as operator of choice, adding 182,261 new mobile customers to its base and bringing the total mobile customer base to approximately 6,639,549 active mobile customers.

Du's sustained momentum in growing its mobile customer base is reflected in its share of the UAE market, which the company estimates to be 48.1%, according to the Telecommunications Regulatory Authority ('TRA') and competitor reports.

The company's focus on improving service experience and bringing innovative products to the market continues to have a positive impact on attracting and retaining high-end mobile users. In spite of seasonality, a total of 38,251 postpaid customers were added during the quarter and postpaid now represents 8.30% of total mobile customers, with prepaid customers representing 91.70% of the total mobile subscriber base.

Mobile ARPU stood at Dhs110 for the first quarter.

- Data revenue growth reflects global trends

Patterns in data usage continue to mirror global sector trends, with mobile data revenue growing from Dhs392m in Q1 2012 to Dhs520m in Q1 2013, representing a 32.77% increase year on year.

While the company experienced a 1.20% decline in fixed line revenues year on year, there was a 1.99% quarter on quarter increase from Dhs391m in Q4 2012 to Dhs399m in Q1 2013.

- Maintained control on overheads

The company is committed to delivering shareholder value and its progress in controlling overheads and optimising efficiencies is clearly demonstrated in the total overheads for the quarter, which stood at Dhs698m, or 26.58% as a percentage of revenue. This represents a decrease of nearly 9.20% in total overheads, and a decrease of 5.83% as a percentage of revenue, over the same period a year ago (32.42% in Q1 2012).

During the first quarter, EBITDA grew by 13.92% year on year, and decreased by 10.39% quarter on quarter to Dhs1,053m, compared to Dhs925m and Dhs1,176m respectively. EBITDA margins stood at 40.11% in Q1 2013, up by 1.13% from 38.98% in Q1 2012, and down by 4.27% compared to the previous quarter.

Net profit before royalty grew by 12.86% year on year from Dhs666m during Q1 2012 to Dhs752m during Q1 2013. Quarterly, net profit before royalty dropped 11.79% (from Dhs852m in Q4 2012).

Net profit after royalty grew by 40.46% year on year to reach Dhs468m in Q1 2013, up from Dhs333m. Quarterly, net profit after royalty dropped 52.93% (from Dhs994m in Q4 2012).

The company is maintaining its levels of investment in infrastructure and networks to ensure it is well positioned to take advantage of opportunities presented by the evolving telecommunications landscape. To this end, Dhs368m was invested during Q1 2013.

Product & Service initiatives during the first quarter:

• Launched Mobile Device Management (MDM), offering both on-premise and cloud-based solutions for businesses to manage corporate data on employees' personal mobile devices.

• Implemented Bill Shock Prevention for users to keep track of data usage and to eliminate the bill shock effect for subscribers, increasing their confidence in using data.

• Launched Blackberry Z10, along with the Easy Payment Plan data package (Elite, Elite Super, Emirati and Pay As You Go) with instalment payments at 0% interest for Dhs255 a month for a period of 12 months. The package includes 1GB of data per month, discounted by 60% and worth Dhs739.

• Launched special Pay As You Go rates for UAE's top international calling destinations in Asia, including Pakistan, Bangladesh, Nepal, Sri Lanka and the Philippines.

• Launched Absher Plan, a postpaid plan specifically designed to meet the lifestyle requirements of Emiratis working in the private sector.