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Du Q2 profit more than doubles, beats forecast

Q2 profit 137 mln dirhams, vs forecast 106-109.5 mln.

August 10, 2010 1:09 by

United Arab Emirates telecoms services provider Du’s second-quarter net profit more than doubled to beat analysts forecasts on the back of growth in both mobile and fixed line subscribers.

Du said on Tuesday it made a net profit of 137 million dirhams ($37.4 million), after royalty, compared with a profit of 58 million a year ago. Analysts had expected a profit of between 106 million to 109.5 million dirhams, a Reuters poll found.

“The numbers seem to be very strong across the board, ahead of our estimate,” said Simon Simonian, telecoms analyst at Shuaa Capital. “Du has been consistently doing well and has been more aggressive in subscriber acquisitions and marketing.”

Shuaa had forecast a net profit of 106 million dirhams.

Du’s chief executive Osman Sultan said he did not expect the UAE’s decision to suspend BlackBerry services in October to have a “significant impact on results of the company this year”.

The UAE telecoms regulator announced in August plans to ban BlackBerry services, citing security concerns.

Du, partly owned by the ruler of Dubai’s investment company Dubai Holding and Abu Dhabi investment vehicle Mubadala Development Co, also reported a 30 percent rise in revenue to 1.7 billion dirhams.

EBITDA grew 87 percent to 454 million dirhams. Fixed-line subscribers grew 52 percent to 499,900.

The company said it increased its active mobile subscribers by 182,100 in the quarter to a total of almost 4 million.

“This growth will continue,” Sultan told reporters on a conference call when asked about his expectations for the rest of the year.

In June, Du said it raised 1 billion dirhams to fund a growth plan and compete with market leader Etisalat .

Sultan said on Tuesday the company did not plan new rights issues, but will study possible options to finance its growth ambitions in coming months.

Shares of Dubai-listed Du rose 3.5 percent to a week high of 2.08 dirhams at 0725 GMT.

Du plans to increase its broadband offering and 3G for mobile data but has no intention to build its own core infrastructure, such as a fibre-optic network, which it shares with rival Etisalat.

Abu Dhabi-based Etisalat, the Arab world’s second-biggest telecoms company, lost its monopoly in the UAE market to Du in 2007, and has been aggressively expanding outside its home market since.

(Reporting by Tamara Walid; Editing by Louise Heavens and Hans Peters)

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