Dubai: Telecom operator du’s first-quarter profit fell 1.43 per cent year-on-year to Dh480.1 million compared to Dh487.1 million, due to a 23.6 per cent increase in royalty fees.

Total revenues grew 1.3 per cent to Dh3.09 billion while mobile data revenue also increased by 8.9 per cent to Dh779 million compared to Dh715.6 million a year earlier Mobile revenue totalled Dh2.21 billion, a 0.9 per cent decrease compared to Dh2.23 billion a year earlier.

Osman Sultan, du’s chief executive officer, told Gulf News the mobile market is more and more saturated.

Moreover, the impact of the “My Number, My Identity” campaign is also putting pressure on revenues.

Mobile data now represents 34 per cent of mobile service revenues compared to 30.9 per cent in the first quarter of last year.

Sultan said data has become a cornerstone of the business and the appetite for connectivity remains “robust”.

Mobile data revenue increased during the first three months of the year, while total data usage grew exponentially during the same period.

With a growing mobile subscriber base of 8.09 million, he said it was clear that customers appreciated the value of du products and services.

“Quality growth remains a key focus for du and a 10.1 per cent year-on-year rise in the number of postpaid subscribers in the first quarter shows our strategy is on the right track,” he said.

Sukhdev Singh, vice-president at market research and analysis services provider AMRB, said the results were not at all a surprise as data revenues were growing faster than mobile revenues.

Increasing penetration of smartphones and lower entry cost to access data are helping this growth. Moreover, he said that data growth is being helped with overall ecosystem change in UAE, particularly Dubai’s drive for Smart Governance.

On the other hand, Singh said that mobile voice revenue growth has been more or less flat due to pressure on economy in general, which is likely to continue for remainder of the 2016. However, as we approach 2020, mobile revenues will see a healthy growth due to both increase in resident population as well as overnight tourists, he said.

Sultan said: “I still see pressure on the revenue growth, continuing for the next two quarters. The level of growth in the mobile market is no longer at the levels we have seen in 2014. Sure, the mobile voice revenue is falling and more are moving to data.

“We have to find better ways to monetise the data. The name of the game will be the shift to mobile revenue. Voice is getting more commoditised,” he said.

The company’s fixed revenue climbed 2.3 per cent to Dh630.3 million compared to Dh616.1 million a year earlier.

Du, which has the third highest market cap after Etisalat and Saudi Arabia’s STC in the Mena telecom industry, is benefiting from the network sharing agreement in new development areas.