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Du’s share prices surged more than 11%

Du rules out plans to expand overseas for the next two years; operator proposes a higher cash dividend of 30 fils per share

Image Credit: Atiq-Ur-Rehman/Gulf News
Gulf News

Dubai: Share prices of Emirates Integrated Telecommunications Company (du) surged more than 11 per cent on Tuesday as it reported a sixth consecutive year of strong performance in 2012 and proposed a higher cash dividend of 30 fils per share.

The telco operator’s shares rallied to a four-year high to Dh4.12 as its revenues surged 14.71 per cent in 2012 to Dh10.16 billion compared to Dh8.85 billion in 2011.

“One of the biggest stories of the year was data. The rapid adoption of smartphones and tablets has continued and consequently growth in mobile data revenues has been significant, increasing by 74 per cent on 2011 and taking overall data revenues to Dh1.76 billion for 2012,” Osman Sultan, CEO of du, said at a press conference on Tuesday to announce its results.

He said du has no plans to expand overseas in the next two years and plans to focus on increasing revenues from the mobile phone segment and offer value-added solutions to corporate customers.

Du was eyeing to expand into Saudi Arabia as a mobile virtual network operator, but the operator does not meet the regulatory criteria set by Saudi Arabia to bid for a licence.

“Du did well in 2012 and once again reported double digit top line growth. What was more impressive is the continuous improvement in its profitability matrices. Moreover, du is undergoing organisational restructuring, which is likely to help the company to further improve its bottom line,” Bhanu Chaddha, senior research analyst at IDC, told Gulf News.

Net profit after royalty stood at Dh1.98 billion, up from Dh1.10 billion in 2011. The company paid a royalty of Dh844 million last year compared to Dh715 million in 2011.

The UAE government last year raised royalty fees on du, which is required to pay five per cent of revenue and 17.5 per cent of profit for 2012.

Mobile revenues grew by 15.95 per cent to reach Dh7.93 billion in 2012.

“I believe there is a re-competition in the mobile sector in the UAE and not in the fixed and enterprise fixed services and this is a fact,” Sultan said.

According to a data published by the TRA and competitor reports, du holds a market share of 48.7 per cent in the mobile space.

Du added 1.24 million net mobile customers during the year to reach a total of 6.46 million. Du added 496,628 active mobile customers during the fourth quarter alone.

In the fourth quarter, the company’s net profit after royalty grew more than 125 per cent year on year to Dh994 million.

Regarding network infrastructure sharing agreement between Du and etisalat, he said that there is a strong willingness by all parties to reach a deal but there are still some hurdles that need to be addressed.

“Our capex for last year stood at more than Dh1.7 billion compared to Dh1.29 billion in 2011. This year also it is expected to be the same as last year. We will be investing more on mobile infrastructure and Long Term Evolution (LTE),” he said.