Dubai
Emirates Integrated Telecommunications Company PJSC (du) reported a 24 per cent decrease in net profit to Dh364.9 million in the first quarter of this year due to higher costs and fall in prepaid mobile revenues.
The telecom operator has been reporting eight quarters of declining profits as the growth of the mobile market has been offset by a steady increase in royalty or tax to the Federal Government.
Revenues for the first quarter increased by 2.5 per cent to Dh3.17 billion compared to Dh3.09 billion a year ago.
Osman Sultan, EITC’s Chief Executive Officer, told Gulf News that mobile revenue fell 0.7 per cent to Dh2.19 billion and this quarter has been quite challenging.
“Despite challenging market conditions, we made steady progress on the implementation of our strategy of customer experience improvement and digital transformation,” he said.
He said that revenue grew at a steady pace, underpinned by an increase in our fixed line business, offsetting pressure on mobile revenue during the quarter.
“We continued our focus on identifying efficiencies during the quarter, which will enable us to deliver long-term value for our stakeholders,” he said.
The operator’s fixed line revenue grew 7.9 per cent to Dh680 million during the quarter.
Sukhdev Singh, vice-president at market research and analysis services provider AMRB, said that the fixed line growth is more due to new areas du is getting into unlike mobile, where share has to be fought out.
“For du, the fixed line will grow inorganically i.e. growth from new areas, whereas any growth in mobile has to be either won from competition or by increasing average revenue per user. Data services will remain core to this growth — it will depend on how well an operator is able to capitalise on the opportunity,” he said.
He added that the addition of Virgin Mobile to the market is likely to help the group overall but might cannibalise the brand du as well when it comes to mobile services.
When asked when Virgin Mobile will be launched in the UAE, Sultan said that the company is waiting for final approval and will be rolled out soon without giving a specific date.
Sultan said that mobile market has been stagnating mainly due to fall in prepaid market. The prepaid segment has shown more volatility.
“We have been working on our cost structure significantly that allows us to ensure that we have a value-creation pocket and, on the other hand, opening new track for growth which is not in the connectivity business,” he said.
He said that the company expects to save more than Dh1 billion from cost optimisation in the next three years.
Singh said that the telecom market is significantly driven by the business sentiment and economic conditions of a country, and UAE is no exception to this. It would be difficult for operators to register organic growth this year.
Du is looking to spread wings outside the UAE but not interested in traditional telecom services, du’s chief said.
Osman Sultan, chief executive officer of du and EITC, said that the operator is interested in B2B services and digital ICT services to consumers.
Du has partnered with Omantel in 2015 to offer its TV services over internet platform.
