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Du looks to mobile data

Saudi Zain Telecom

Data's growing contribution to mobile revenue is part of du's push to focus more on increasing earnings per-customer rather than on expanding mobile market share.

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October 22, 2012 5:46 by



Du, the United Arab Emirates’ No.2 telecom operator, aims to capitalise on wealthy customers’ appetite for data via smartphones to offset margin pressures in its mobile phone business that held back third quarter profit growth.

The firm on Monday posted a 34 percent rise in profits for the three months to September 30, but this fell short of analysts’ forecasts.

Du, which ended rival Etisalat’s domestic monopoly in 2007, made a third quarter net profit of 326.9 million dirhams ($89.00 million), compared with 244.3 million dirhams in the year-earlier period.

Analysts polled by Reuters on average forecast du would make a quarterly profit of 333.3 million dirhams.

The UAE’s telecom sector as a whole is experiencing a slowing in revenue growth due to the country’s largely foreign workforce increasing use of internet-based services, hurting operators’ lucrative international call and text businesses.

“We continue to witness pressure on voice, while mobile data revenue increased significantly,” Chief Executive Osman Sultan told reporters on a conference call.

Third-quarter mobile data revenue nearly doubled to 323 million dirhams from a year ago. This was 17 percent of total mobile revenue, which rose 13 percent to 1.94 billion.

“I wish to see it (mobile data) in the 25 percent range at the end of next year,” Sultan said.

Data’s growing contribution to mobile revenue is part of du’s push to focus more on increasing earnings per-customer rather than on expanding mobile market share.

To achieve this, du will try to up the proportion of mobile customers on post-paid monthly contracts to more than 10 percent by 2013-end, from 8 percent as of Sept. 30. These customers are typically wealthier and spend more on telecom services.

The operator had 5.96 million mobile subscribers on Sept. 30, adding 227,800 in the quarter.

This gave it a 47.2 percent share of the UAE’s mobile subscribers, up from 46.5 percent in the second quarter.

Quarterly revenue was 2.52 billion dirhams. This compares with 2.23 billion dirhams a year ago.

Du also aims to increase revenue from business customers and home services, but its failure to agree a network sharing deal with Etisalat to allow full competition for fixed line services and the lack of mobile number portability (MNP) could hinder this.

Both operators offer fixed-line voice, broadband and television services but not in the same districts and an agreement to share their respective infrastructure was due to be concluded last year.

“It’s a difficult discussion,” said Sultan. “This is taking more time than expected. It’s not happening for the moment.”

MNP allows customers to switch operator and retain their old phone number, which is seen as key for business customers. In 2007, the UAE regulator said it would introduce MNP the following year, but has yet to do so.

“The introduction of mobile number portability will help,” added Sultan.

Du’s net profit margin was 25.9 percent in the third quarter, up from 21.9 percent a year ago.

The firm’s shares ended 1.3 percent lower after the results were announced. The stock is up nearly 30 percent so far this year.



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