Du expects growth to come from non-connectivity business

Hopes to save more than Dh1b from cost optimisation in the next three years, CEO says

DUBAI: Emirates Integrated Telecommunications Company PJSC (du) sees margins to be more challenging in 2017 and expects growth to come from non-connectivity businesses such as ICT services.

Du has been reporting a fall in profits for the past two years due to the change in royalty structure. The operator has paid a little more than 55 per cent of its net profit as royalty fees in 2016.

“We have been working on our cost structure significantly that allows us to ensure that we have a value-creation pocket and, on the other hand, opening new track for growth which is not in the connectivity business,” said Osman Sultan, EITC’s Chief Executive Officer.

He said that the company expects to save more than Dh1 billion from cost optimisation in the next three years.

“We plan to continue our close cooperation with our strategic partners to develop a full range of smart services and cloud solutions, providing only the best possible assistance to our customers, but also helping to drive the UAE’s innovation agenda as well as Dubai’s transformation into the smartest city in the world,” he said.

Telecom operators are licensed to offer connectivity services. On top of that, he said that du can build a lot of services by partnering with other companies for smart city, hosting data services, smart home, managed services, etc.

As the pre-paid segment has seen a more challenging situation than post-paid for du this year, Sultan said that in a bid to regain its momentum in the prepaid market, “we need to simplify our propositions and work on ensuring that we attract the right users”.

Out of the 8.64 million subscribers, post-paid contributed just over 11 per cent to the mobile revenue.

He said that the main business came from the fixed line last year and the fixed-line revenue is driving the growth.

Du’s fixed revenue grew 4.4 per cent to Dh2.67 billion compared to Dh2.55 a year ago while its mobile revenue grew by 0.3 per cent to Dh8.97 billion compared to Dh8.94 billion.

“We have added almost a million new mobile customers during the year, registering a growth of 12 per cent to 8.64 million, while our focus on cost efficiency maintained our EBITDA levels whilst we invested in our transformation to an integrated digital provider,” Sultan said.

For 2017, he said the revenue will grow in single digit but fixed-line revenue will grow more than the mobile revenue.

For 2016, du reported a 9.7 per cent decrease in net profit after royalty to Dh1.75 billion compared to Dh1.94 billion a year earlier while its revenue grew 3.2 per cent to Dh12.34 billion.

Du proposes Dh0.21 per share dividend for second half

Emirates Integrated Telecommunications Company PJSC (du) has proposed a final dividend of Dh0.21 per share for the second half, bringing the annual dividend payment to Dh0.34 per share for 2016.

This includes a Dh0.13 per share interim dividend paid in October.

In 2015, the telecom operator paid an annual dividend of Dh0.33 and a one-off special dividend of Dh0.10.

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