Lower profit for du’s parent on one-off cost

Emirates Integrated Telecommunications Company, the parent of operator du, posted a 7.4 per cent drop in third-quarter net profit due to a one-off item in last year’s comparative period and a dip in mobile subscribers.

The Dubai telco made a net profit after royalty of Dh441 million in the three months to September, it said in a statement on Thursday. Du missed the Dh451m median estimate of two analysts polled by Bloomberg.

The UAE’s second-largest telecom operator expects growth of mobile subscribers to be affected by the decline in pre-paid customers as the company focuses on high-end prepaid, post-paid and fixed-line clients, said chief executive Osman Sultan.

“The level of churn has been extremely high by the nature of some offers in the market,” Mr Sultan said. “We are focusing on high-end pre-paid, and that strategy is working well because it is limiting the decline we anticipate in pre-paid.”

The company’s active mobile subscribers declined 3.3 per cent in the third quarter to 7.71 million. The company has disconnected some mobile customers on the back of the UAE regulator’s “My Number, My Identity” campaign. Fixed line subscribers during the quarter grew 5 per cent to 760,000.

In the third quarter of last year, there was a one-off gain from the reversal of depreciation cost, which affected third quarter results this year, Mr Osman said. He declined to disclose the size of the exceptional item.

“If you adjust for that one-off, earnings would look almost unchanged year-on-year,” said Omar Maher, an analyst with EFG Hermes. “The results are in line with our estimates at all levels, so no surprises there and nothing to be concerned about, in our view. Revenue and margins are still pretty healthy despite slower growth in the economy and talks of expat departures.”

Total revenues rose 6.4 per cent to Dh3.33 billion while mobile revenues increased by only 0.3 per cent to Dh1.78bn. Fixed line revenue registered good comparative growth, increasing 7.8 per cent to Dh579m during the period.

Last week, the UAE’s biggest telecom operator Etisalat had reported a drop of 4.2 per cent in its third-quarter net profit as expenses and expenditure rose.