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du Q1 net profit more than quadruples

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CIOL Bureau
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DUBAI, UAE: Dubai telecom firm du said on Tuesday net profit before royalty in the first quarter more than quadrupled, driven by subscriber growth and beating analysts' forecasts, while the outlook for its fixed line business remained strong.

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du, owned partly by the ruler of Dubai's investment company Dubai Holding and Abu Dhabi investment vehicle Mubadala Development Co, easily beat forecasts with its earnings, and one analyst said its ability to attract more mobile subscribers will ensure strong performance this year.

The firm also said it won shareholder approval for a 571.4 million share rights issue. The new shares will be priced at 1.75 dirhams, a deep discount to its current stock price of 2.55 dirhams at Monday's close.

du's shares have yet to trade on Tuesday on Dubai's bourse.

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The telco said last month it would pursue a rights issue to fund infrastructure improvements beyond 2010.

The operator, which recorded its first full-year profit in 2008, said in a statement net profit before royalty for the first quarter was 194 million dirhams ($52.83 million), compared with 47 million dirhams in the year-ago period.

Analysts in a Reuters survey in April forecast an average net profit of 97.2 million dirhams.

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"The subscriber growth was the main driver behind du's highest mobile revenues for a quarter ever," the firm said in the statement.

du, said it gained 262,000 mobile telephone customers in the three months to March 31, bringing its total active subscribers to 3.74 million.

"Outlook for our fixed line business ... remains strong with the prospect of a nationwide infrastructure agreement," the firm's chief executive Osman Sultan said.

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du's fixed line subscriber base grew to 456,700 lines in the first quarter from 310,900 lines in the same period last year.

"We were quite surprised by the number of mobile subscribers added during the quarter and the mobile usage," said Marise Ananian, vice president, telecoms, at EFG-Hermes in Cairo.

"The company continues to surprise in terms of subscriber additions and is able to capture more of the market which it has been doing over the last year. We are expecting the company to continue its good performance."

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Highest mobile revenues for a quarter

The operator, which broke Emirates Telecommunications Corp's (Etisalat) monopoly in 2007, said total revenue for the quarter rose 36 percent from a year earlier to 1.6 billion dirhams.

Mobile revenues were their highest ever for a quarter, jumping 47 percent to 1.17 billion dirhams.

Sultan also said the firm is in the process of exploring opportunities in digital content and the internet through joint ventures and partnerships.

du's strong performance in the first quarter contrasts with that of Etisalat, which reported a decline of 8.5 percent.

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