Dubai: Telecom operator du has reported an 8.05 per cent fall in preliminary full-year profit to Dh1.94 billion, compared to Dh2.11 billion a year earlier, due to an increase of 20.6 per cent in royalty fees.

The firm’s net profit before royalty grew by 4.3 per cent to Dh3.86 billion, it disclosed in a statement to the Dubai bourse on Sunday.

Sukhdev Singh, vice-president at market research and analysis services provider AMRB, told Gulf News that the growth in the top-line for the telco is relatively moderate, and perhaps a result of increasing economic pressure in the region. Singh said growth appeared to have been slower towards the end of the year largely due to falling oil prices that resulted in the perception of a general slowdown in the business environment.

The operator was paying a 17.5 per cent royalty on profits in 2012 and 5 per cent on revenues to the Ministry of Finance while its profit royalty incrementally increased from 25 per cent in 2014 to 30 per cent in 2015.

The revenue royalty will increase to 15 per cent in 2016.

The operator’s revenue for the full year increased by 0.8 per cent to Dh12.34 billion, compared to Dh12.24 billion in 2014.

“The revenue growth was impacted by [the] ‘My Number, My identity’ [MNMI] campaign, as directed by the Government. Our focus on developing a diversified and sustainable business model that provides [innovative], bespoke products for our consumer and enterprise divisions has enabled us to buffer much of the effect,” du said in a statement to the Dubai Financial Market (DFM).

For the fourth quarter of last year, the operator’s profit suffered a 10.28 per cent decline to Dh460 million, compared to Dh512.7 million during the same period a year earlier, while its revenues fell 2.79 per cent to Dh3.14 billion, compared to Dh3.23 billion a year earlier.

The company’s earnings before interest, taxes, depreciation and amortisation (Ebitda) increased 7.7 per cent to Dh5.42 billion in 2015 due to increased operational efficiency. But its Ebitda increased 16.8 per cent in 2014 to Dh5.03 billion.

“It is encouraging to note that with almost 4 per cent of growth, operating profit grew faster than the top-line growth, apparently an indication of better process efficiency,” Singh said. “At the same time, the strict implementation of [the] MNMI [campaign] would have also resulted in weeding out non-active low average revenue per users out of the network.”

However, he said that higher pay-outs in royalties have had an impact on the company’s net profit which went down almost 8 per cent. The year has also seen higher royalty charges of more than 20 per cent, resulting in a drop in net profit.

“But one would not really worry too much about it as the company has managed to retain top-line revenues and improved operating profit in difficult times as such,” he said.