Dubai: Telecommunications operator du will spend Dh1.7 billion in infrastructure development during this year, as it expands fixed line services across the country.
"We've looked at some project and we've been selective," chief executive Othman Sultan said to reporters yesterday, saying the investments will be related to infrastructure.
The operator for the first time, ended the year with a free cash flow position with Dh33 million as it reported a net profit before royalty of Dh1.2 billion for 2010.
Royalties
Du has been provisioning for a 50 per cent of net profit in royalties to the government since it turned profitable. Earlier this year, the government authority declared a 15 per cent payment for du in royalties, leading to freed cash of about Dh800 million.
When asked how the company would utilise the extra cash, Sultan said: "We have a Dh3 billion bulletry payment due in June."
The operator has raised Dh1 billion through a rights issue, to improve its capital structure and allow for more financing options.
Additionally, it borrowed $255 million or Dh825 million in a medium-term loan facility last year.
Sultan said the company is evaluating its financial needs and will later decide on how to deal with the principal loan, whether to restructure it or refinance.
"We're looking at the best option," he said.
Above expectations
The company's operations last year included a mobile subscriber growth of 856,000, while revenues of Dh7.07 billion beat analysts expectations.
"The decision on royalty and the success of the rights issues together with the signing of the vendor financing agreements, whilst fundamental in achieving its optimal capital structure, have strengthened the options available to the company when considering its loan repayment of Dh3 billion due in June 2011 and its future needs for development and value creation to shareholders," the company said in a statement.
