Dubai Telecoms operator du posted a 62 per cent rise in first-quarter net profit Thursday as new subscribers joined and mobile data revenues more than doubled.
Du, formally known as Emirates Integrated Telecommunications Company made a profit Dh666 million — before paying a royalty fee to the federal government — in the three months to March 31, up from Dh412 million in the year-before period.
The operator also said 320,600 mobile customers joined the company in the first quarter, bringing du's total mobile operator base to 5.5 million. Revenues increased 20.1 per cent year-on-year to Dh2.4 billion, up from Dh2 billion.
"One obvious challenge for du is the high mobile penetration rate in the UAE, which could inhibit the strong subscriber growth du has witnessed in the recent past," said Hasan Sandila, a telecommunications analyst at IDC Middle East.
"We expect mobile number portability to be launched in the third quarter, which would lead to price point competition in the market. This may rationalise the tariffs and could eventually result in slower revenue growth for both etisalat and du," he added.
Du said quarter-on-quarter growth in net profit was positively impacted by an exceptional impairment of Dh47 million in the fourth quarter of 2011 and one-off gains of approximately Dh30 million from favourable settlements in the first three months of this year.
"We have enjoyed a strong start to the year," said Othman Sultan, du's chief executive officer.
"We have achieved healthy growth in revenues, with strong performance from what we believe will be key drivers going forward including mobile data revenue and our post-paid subscriber base," he said.
Mobile data
"Our mobile data revenues in particular more than doubled year on year. We believe this will continue to grow in importance as a revenue stream, and we will seek to continue developing innovative products and services that encourage data usage," he added.
Du's fixed line subscribers also rose 13.5 per cent to 545,300, while the firm's operating margin in the first-quarter was 37.8 per cent, up from 30.5 per cent in the corresponding period of 2011.
"The largest driver of revenue growth for du is still the mobile segment, which is supported by strong mobile subscriber additions, as well as increased contribution from mobile data revenue," said Omar Maher, an equity research analyst at Egyptian investment bank EFG-Hermes.
"Since du launched its operations in the UAE, it has benefited from the country's growing population. The main challenge in the future could be slower population growth rates. We believe du is well positioned to protect its current ARPU (average revenue per user), but the challenge could be more value extraction from subscribers in order to boost ARPU, not just protect it," he added.
