Increased mobile data usage and a lower-than-expected royalty charge helped UAE telecommunications operator du to post record fourth quarter profits today.
The operator also reported annual net profits after deducting royalty charges of Dh1.31bn, an increase of 396 per cent on 2009. Revenues rose 32 per cent to Dh7.074bn.
The lower-than-expected royalty charge as well as a number of vendor financing agreements helped du to report annual positive free cash flow for the first time with a gain of Dh33m.
The company reported that it earned Dh912 million (US$248m) in net profits after royalty charges in the last quarter ending last December, an increase of compared to Dh104.5m from the same quarter in 2009. It reported revenues of Dh2.046 billion, a 34 per cent rise from the fourth quarter of 2009.
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Du's profits include a one-time gain of Dh481m and was included in the fourth-quarter earnings after the UAE Government announced that the operator would only have to pay a 15 per cent royalty charge last year. Du provisioned half of its profits over the past year in anticipation of the exact royalty payment that would be levied to the company.
Analysts polled by Bloomberg estimated that du, the smaller of the UAE's two telecoms operators, would report revenues of Dh1.809bn and net profits of Dh358.6m during the quarter.
Du added 252,000 new mobile subscribers in the quarter, bringing its total customer base to over 4.3 million users. It gained 856,000 mobile subscribers last year and now has about 40 per cent share of the market.
The company also added 45,500 fixed-line accounts during the quarter, an increase of 38 per cent from the same quarter in 2009. It now has 561,000 fixed-line customers.
"Our financial results exceeded expectations and across the business our people, processes, products and services delivered on all fronts," said Osman Sultan, the chief executive of du.
"In addition to record revenue growth we achieved company-wide operational efficiencies, while maintaining ongoing investment in our network."
The operator reported annual net profits after deducting royalty charges of Dh1.31bn, an increase of 396 per cent on 2009. Revenues rose 32 per cent to Dh7.074bn.
The lower-than-expected royalty charge as well as a number of vendor financing agreements helped du to report annual positive free cash flow for the first time with a gain of Dh33m.
Mobile data and promotions helped to increase Du's average revenue per user (ARPU), a key telecoms figure, to Dh125 last quarter from Dh112 in the same quarter last year.
Etisalat, du's chief rival, has to pay half of its royalties to the UAE Government, a fee that the operator is seeking to amend.
Du is 39.5 per cent owned by Emirates Investment Authority, 19.75 per cent by Mubadala Development Company and 19.5 per cent by Dubai Holding with the remaining stake held by public shareholders.
dgeorgecosh@thenational.ae
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