Dubai
Dubai-based telecom operator du’s third-quarter net profit fell 6.66 per cent to Dh457.2 million compared to Dh489.8 million a year ago due to an 11.6 per cent increase in year-on-year royalty fees paid to the federal government.
But its revenue for the quarter grew 2.9 per cent to Dh3.14 billion compared to Dh3.05 billion.
Osman Sultan, CEO of du, said that the increase in revenue is not sufficient to offset an 11.6 per cent increase in royalty fees.
It is the eighth consecutive quarter of fall in profit for the operator but Sultan said it is a decent profit when compared to the current situation.
“Net profit for the quarter before royalty grew 2.4 per cent to Dh995.1 million compared to Dh971.7 million a year ago. We are doing much better than other telecom operators in the region,” he said.
Year to date, du’s revenue is up by 1.1 per cent compared to the nine months to September 30, 2015.
Sukhdev Singh, vice-president at market research and analysis services provider AMRB, said that the performance of du, despite tight economic conditions in the region, is acceptable as telcos usually have a better third quarter. Net profit is hit due to higher loyalty payout as compared to a year ago.
EBITDA (earnings before interest, tax, depreciation and amortization) was steady at Dh1.38 billion versus Dh1.38 billion a year ago, and up 2.6 per cent year to date compared to 2015.
Du has registered a 10.9 per cent in post-paid customers but its revenue from mobile data remained flat at Dh737.3 million versus Dh741.8 million a year ago.
Regarding this, Sultan said that revenues are the combination of usage and pricing. Even though the usage of mobile data has increased, du has been generous to cut the prices.
“We need to ensure that the mobile data revenue is growing as voice revenue is falling,” he said.
Mobile revenue totalled Dh2.22 billion, a 2.7 per cent increase compared to Dh2.16 billion a year ago.
Mobile data now represents 33 per cent of mobile service revenues compared to 32.9 per cent in 2015.
Singh said that mobile data revenues are key to growth, and unless telcos are innovative enough to pull the data usage up, overall growth will get impacted. Though du has a healthy contribution of 33 per cent from mobile data services, it still can grow further.
“Few factors that will impact data uptake in the near future from consumer point of view would include network quality in terms of availability and stability, affordability and opportunity to use data services. First two factors will determine how a telco can exploit the opportunities getting generated by third parties,” he said.
Even though fixed revenues rose 3.17 per cent to Dh681.1 million compared to Dh656.8 million a year ago, Sultan said that it is not due to network sharing agreement but it is due to bitstream agreement on new real estate developments.
With bitstream, an etisalat subscriber who opts to go for a du connection needs to install a set-top box on top of the existing etisalat’s set-top box. But in passive sharing [network sharing], du leases the fibre optic cable from etisalat and the customer need only install one set-top box.
“We never saw the sharing deal to be real game changer as only fixed line and internet are allowed as part of the agreement and TV services are not included.