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du drops plans for KSA
Du said its fourth-quarter net profit more than doubled after it wrote back tax provisions.
February 19, 2013 6:05 by Reuters
Du, the United Arab Emirates’ No. 2 telecom operator, beat quarterly profit forecasts, helped by a buoyant local economy, and said it was dropping plans to expand into Saudi Arabia because it would need to find a partner.
Chief executive Osman Sultan said on Tuesday du did not meet the criteria to bid for one of three so-called mobile virtual network operator (MVNO) 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.”
MVNOs lease capacity from conventional mobile operators and pay a percentage of their revenue to them, as well as fees.
Dubai-based du had hoped to expand beyond its UAE base as mobile penetration growth stagnated, but with the country’s economy buoyant this now appears less of a priority.
The UAE government has estimated GDP grew around 4 percent in 2012, while it attracted 30 billion dirhams ($8.2 billion) of direct foreign investment last year.
Du said its fourth-quarter net profit more than doubled after it wrote back tax provisions. Its per-customer revenue also rose and its mobile subscriber base increased by nearly a quarter from a year earlier.
Sultan said du’s 2013 capital expenditure would be roughly the same as last year’s 1.7 billion dirhams, with the money to be spent on expanding and improving its mobile network and broader infrastructure.