The UAE phone company du is closing the gap on its larger rival Etisalat with profits surging 50 per cent and the number of mobile subscribers nearing the 5 million mark.
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Third-quarter profit at du advanced to Dh489 million (US$133.1m) from Dh326m in the same quarter last year, driven by higher data revenue and a widening pool of mobile subscribers that grew by 162,000 in the period.
Mobile data revenues increased 46 per cent compared with the same quarter last year to Dh167m while the company also added more post-paid customers, who accounted for almost half of the revenue growth over the quarter.
"Our third-quarter again was another growth quarter," said Osman Sultan, the chief executive of du. "We moved from a number of 515,000 lines last year in the same quarter to 639,700, with an addition of more than 16,000 lines added only during the third quarter," said Mr Sultan.
Sales increased 28 per cent to Dh2.23 billion in the quarter compared with the same period last year, with revenues from its fixed-line business that includes TV and broadband services increasing by the same percentage to Dh380m.
Its ability to compete with Etisalat in the fixed-line business has been hampered by the restriction of du services in certain areas of the UAE.
The UAE's telecommunications regulatory authority has set a year-end deadline for the two companies to share fixed-line infrastructure.
However, du has still seriously challenged Etisalat on mobile subscribers, with it taking about 45 per cent of the home market.
"Du's not just a competitor but it's a true alternative in terms of products and services that it offers," said Philip Brazeau, a telecommunications analyst at Al Tamimi, a legal firm. "The quality of their network, the availability of their products and services and the quality of their service is equal to Etisalat."
The company expects continued sales growth of between 26 per cent and 28 per cent in the fourth quarter.
"At the beginning of the year we were looking at about 20 per cent revenue growth, then mid-year they said they can achieve something closer to 25 per cent. If they make more than 25 per cent for the full year, I think they're again ahead of expectations," said Simon Simonian, a telecoms analyst at Shuaa Capital.
"Unless Etisalat becomes more agile, it could find itself losing its dominant position," said Mr Brazeau.
