Complex Made Simple

UAE telco du Q1 net profit falls 0.6 pct, misses estimates

DU made a net profit of 487.1 million dirhams ($132.6 million) in the three months to March 31.

By Matt Smith

DUBAI, April 28 (Reuters) – Du, the United Arab Emirates’ No.2 telecom operator, reported a 0.6 percent fall in first-quarter profit on Tuesday, missing analysts’ estimates as it paid a higher tax rate than a year earlier and its mobile subscriber base shrunk slightly.

The company, which ended rival Etisalat’s domestic monopoly in 2007, made a net profit of 487.1 million dirhams ($132.6 million) in the three months to March 31, down from 490.3 million dirhams in the year-earlier period.

Three analysts polled by Reuters had on average forecast du would make a quarterly profit of 564.7 million dirhams.

First-quarter revenue was 3.05 billion dirhams, down from 2.96 billion dirhams a year earlier.

Du paid royalties – or tax – of 437.9 million dirhams in the first three months of 2015, up from 375 million dirhams in the prior-year period.

For 2014, du paid 10 percent of its regulated revenue and 25 profit of its regulated profit in royalties to the federal government. These have increased to 12.5 and 30 percent respectively this year.

The term regulated refers to services that are within the remit of the UAE’s telecom regulator and excludes the likes of handset sales.

Du’s quarterly mobile revenue was 2.24 billion dirhams, compared with 2.23 billion dirhams a year earlier.

The operator had 7.48 million mobile subscribers as of March 31, down 0.9 percent from 12 months earlier, a drop du attributed to a government-led campaign to re-register mobile accounts.

First-quarter mobile data revenue rose 14.4 percent to 715.6 million dirhams, accounting for 30.9 percent of mobile revenue, which is up from 27.6 percent a year ago.

Quarterly fixed revenue rose 20 percent year-on-year to 616.1 million dirhams, but wholesale revenue fell 12.5 percent to 151.3 million dirhams over the same period. ($1 = 3.6730 UAE dirhams) (Reporting by Matt Smith; Editing by Olzhas Auyezov and Anand Basu)