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[February 21, 2013]
Du net profit soars 56% to Dh2.82b on high revenues [Khaleej Times (United Arab Emirates)]
(Khaleej Times (United Arab Emirates) Via Acquire Media NewsEdge) DUBAI ¡ª Telecom operator du on Tuesday posted a net profit growth of 55.81 per cent to Dh2.82 billion in 2012 before royalty as its revenues rose 14.7 per cent to Dh10.16 billion.
The second telecom service provider of the UAE, also known as Emirates Integrated Telecommunications Co, said it had more than doubled its fourth quarterly profits as it wrote back royalty provisions while recording an increase in subscriber base.
Du, reporting the sixth consecutive year of strong performance, said it was shelving plans to expand into Saudi Arabia because it would need to find a partner.
Du, which has been recording a fast track growth since its inception in 2007, made a fourth-quarter net profit of Dh994 million in the three months to December 31, up from Dh440 million in the year-earlier period.
Net profit after royalty stood at Dh1.98 billion up from Dh1.1 billion in 2011, reflecting the royalty of five per cent of revenues and 17.5 per cent of net profit, the telecom operator said in statement.
Ahmad bin Byat, Chairman of du, said by the end of 2012 the operator served 48.7 per cent of the UAE mobile market. ¡°Our successes have come against a backdrop of challenges.¡± Fourth-quarter revenue was Dh2.74 billion. This compares with Dh2.4 billion a year earlier.
The operator had provisioned to pay 50 per cent of its profit in royalty fees through the year, but a new formula warranted it to pay less fees as a percentage of profit than 2011. This has enabled it to write back some of the provisions it set aside in the first nine months of 2012.
Du paid Dh844 million in royalty fees for 2012, while pre-royalty net profit was Dh2.82 billion, which is equivalent to a fee rate of about 30 per cent.
This compares with 2011¡äs royalty of Dh715 million and pre-royalty net profit of Dh1.81 billion, which equates to a tax rate of 39.5 per cent.
Du has proposed a cash dividend of 30 fils per share. Chief executive Osman Sultan said du did not meet the criteria to bid for one of three so-called mobile virtual network operator licences for sale in Saudi Arabia.
¡°We wouldn¡¯t qualify directly (and) going there through some kind of partnership would make the financial equation less interesting,¡± he told reporters. ¡°I don¡¯t see us going into regional expansion at least in the coming two years in the traditional way, which is new licences.¡± Following the announcement, du rallied 12 per cent toDh4.12, its highest level in more than four years at the close in Dubai on Tuesday. Du stock was the biggest advancer on the benchmark DFM General Index, which gained 1.7 percent. About 18 million shares were traded, more than 10 times the three-month daily average.
Sultan said du¡¯s 2013 capital expenditure would be roughly the same as last year¡¯s Dh1.7 billion.
¡°Sustained investment in infrastructure is an essential part of the ongoing development of our capabilities and in 2012 we invested more than Dh1.72 billion in our network and IT,¡± he said.
The operator had 6.46 million mobile subscribers as of December 31, up from 5.2 million a year earlier, giving it a market share of 48.7 percent. Mobile revenues grew by 15.95 per cent to reach Dh7.93 billion in 2012, up from Dh6.84 billion in 2011, driven by strong customer additions across all segments, with a notable increase in the number of high-value postpaid customers, the company said.
Average revenue per user rose to Dh117 in the quarter from Dh110 in the third quarter.
The company has sought to sign up more mobile customers to monthly, or post-paid, contracts, with these customers typically spending more and being less likely to switch provider.
Post-paid subscribers accounted for about a quarter of du¡¯s fourth-quarter mobile revenue of Dh2.18 billion, but less than a tenth of subscribers.
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