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Super Duper Du
With du posting the results of its first quarter earnings, Kipp brings you our round up of the happening world of UAE telecos.
April 25, 2011 4:16 by Eva Fernandes
Du has just released the results of its first quarter to much surprise to many analysts who had predicted lower results from the youthfultelco.However, it’s good news all round for the relatively younger telco. Not only did du report a first-quarter revenue of Dh2.04 billion (a 29 percent jump from last year’s Q1 of Dh1.58 billion) but also reported that it now had a chunky 40 percent share of the UAE mobile market with a first-quarter net profit of Dh205.8 million.
But wait, that’s not all because du also reported that during this quarter it added a pretty impressive 272,000 active mobile subscribers and invested Dh477 million in its infrastructure. The company is also in advanced discussions with banks to refinance part of its Dh3 billion loan, which is maturing in June.
What is particularly impressive about this quarter’s results is that du still managed to report particularly high profits irrespective of the increased royalty fee it had to pay the government (50 percent). Du’s net profit for the quarter before royalties was Dh412 million—although some speculate that the 50 percent royalty fee is likely to be reduced by the end of this year. In the past, du had to pay a 15 percent royalty fee to the government, unlike Etisalat which used to pay 50 percent of its annual net profits as royalties.
Speaking of du’s bigger brother, Etisalat also posted its first quarter results last week, let’s just say it wasn’t as rosy. To start with Etisalat reported that its first-quarter net profit fell 8.9 percent on account of rising operating expenses. To be specific, Etisalat reported a Q1 profit of Dh1.82 billion, down from Dh1.99 billion in Q1 2010. Of course,Etisalat has been having a rough couple of months, what with the painfully long, drawn out bid to buy a $US12 billion (DH44.1 billion) stake in Zain, withdrawing from plans to bid in Syria and now it has just emerged that Etisalat’s group chief financial officer, Salem Al Sharhan has resigned due to personal reasons.
Then again, acquisitions and mergers in MENA telco’s is a tricky business so we probably shouldn’t be giving Etisalat such a tough time. After all, GhassanHasbani,chief executive of Saudi Telecom Company (STC) told The National that with regional telcoacquisitions continuing at the pace its current pace, he expects that in a good four to five years, “the biggest share of the market in the region will be controlled by three to four groups in the next four years.” Which makes Kipp wonder, with du’s impressive growth rates, what role will the UAE’s younger telco play in the future of MENA telco scene?